NZ telcos divided over decision in Australia

By Richard Braddel

WELLINGTON - "Just what New Zealand needs" was Clear Communications' reaction to the Australian competition watchdog's ruling that Telstra must let competitors on to its local network on a cost-plus basis.

But Saturn Communications, which is rolling out its own cable in Wellington, was less enthusiastic.

The Australian Competition and Consumer Commission confirmed on Thursday that it would require Telstra to give competitors direct access to its copper network.

Clear spokesman Clayton Cosgrove said: "This is exactly the sort of reform that is required in New Zealand."

In supporting its decision, the Australian commission said the boost to competition would force down the cost of local calling, although it also said it would take time to resolve the technical issues involved in enabling Telstra's competitors to run their own services, such as high-speed Internet, over Telstra's network.

In New Zealand, Telecom has court backing for a charging regime that allows it to recover part of the cost of its investment in the residential network

Saturn's director of corporate affairs, Sean Wynne, was less rapt with the Australian decision.

"The idea of Saturn spending $230 million to build our network and then having to grant access through that network for other people is something we would have real issues with," he said.

But that view is at odds with Telstra's largest competitor in Australia, Cable & Wireless Optus, which was positively gleeful about the commission ruling.

Its director of regulatory and public affairs, Stephe Wilks, said that while the company had made $A7 billion in network investment, its network still did not go everywhere, so gaining access to Telstra's copper would fill an important gap.

Optus' network is based largely on the same HFC used by Saturn to deliver pay television, telephony and, from next month, high speed Internet via cable modems.

In addition, in city centres Optus uses straight fibre, while satellite distribution for Internet and telephony will come on stream in coming years in remote areas.

But until that happens, Optus is more than happy to take advantage of Telstra's copper to deliver high-speed Internet services using xDSL, the technology behind Telecom's recently launched Jetstream service which stretches the bandwidth capacity of traditional networks.

But xDSL has its limitations, particularly on older copper wire and because of the requirement for close proximity to the exchange. Many of Telecom's customers will not be helped.

Mr Wilks was confident that the inefficiencies inherent in the older copper network would give Saturn a competitive edge regardless, particularly given its bundling of pay television with other broadband services.