Untangling broadband, local loops and regulation

What is broadband?

It is a loosely used term covering fast connections to the internet to receive and send information. The most common form is ADSL - using your phone line at a different frequency to send data. There are also low data caps and strict limits about how much information you can send from your computer. Super-fast connections with high data caps are very expensive in comparison with other countries.

What is all the fuss about?

The Government is convinced that slow, expensive broadband that few people use is holding back economic growth, so it has decided to even further loosen Telecom's grip on its phone line network by unbundling the local loop.

Local loop?

Another horrible technical phrase that basically means the equipment in phone exchanges and the wires that run from them to houses and businesses. Most countries have been through the process of removing a monopoly's grip on the wires and introducing competition.

Haven't we been here before?

Yes, successive governments have mulled it over and backed away. To show how much technology has moved on, those early debates hardly talked about internet connections, just Telecom's monopoly on voice calls. Now hardly anyone bothers about old-fashioned phone calls.

What happened?

Cabinet papers said Telecom didn't deliver on its promises, despite a last-minute push by the telco to sign people up to broadband (you may recall its intense advertising in recent months).

Didn't work?

No, too little, too slow, was the Government's response.

Arguments against unbundling?

Some argue it is theft of a property right. When Telecom was sold, the shareholders who bought the network spent a lot of money upgrading it. Now the Government is changing the rules.

Telecom could also stop investing in further upgrades and progress could slow down, not speed up.

Also you may have noticed that a lot of investors have been hurt by the recent plummeting share price.

Government not convinced by that?

No, it decided that Telecom had been using profits from its virtual monopoly to pay high dividends instead of investing in technology.

What next?

The Government will legislate this year and then it hopes fast, cheap broadband will become commonplace before the election in 2008.

What will people use it for?

The Government hopes for innovative new businesses and more efficiency in the workplace, but experience indicates it will probably mean a lot more high-speed porn.

- NZPA