Chris Barton: Telecom fighting losing battle

COMMENT

And the walls came tumbling down. Fortress Telecom was breached yesterday by a small band of bureaucrats carrying the flag of competition.

Led by Commissioner Douglas Webb, their efforts have established a beachhead inside the last bastion of the Telecom monopoly - the local exchange.

If all goes according to plan, and the regulatory controls Webb and his team put in place hold firm, exchanges all over the country will be opened to competitors - new entrants who will for the first time have a chance to offer both voice and internet services to Kiwi homes.

Choice at last. And great news for residential consumers who Webb says will see not only a greater range of telecommunications services, but also "price falls" of 51 per cent over five years for fast internet services.

There's similar good news for business customers, who will soon enjoy more competitive offerings on high-speed data links, which have also been under a Telecom stranglehold. On this front Webb says price falls will be even greater - 62 per cent over five years.

A great victory for competition and common sense - right? Maybe. There are some significant barriers yet to overcome.

This stage is just a draft recommendation - an opening salvo. Telecom still has a few months to persuade Webb to retreat. But given his previous form on draft recommendations, Webb will go through the motions and keep the current proposal largely intact.

In December he presents it to Government - namely Communications Minister Paul Swain - and that's where things could come unstuck.

Swain is known for his anti-local loop unbundling views and is single-handedly responsible for keeping the issue off the regulatory agenda for so long. Like many politicians he is also Telecomphobic - prone to cave into the Telecom lobby that will now be beating a path to his door.

But to give him his dues, he is also the one who put in place the Telecommunications Act that has allowed Webb's shock troops to get this far. Perhaps under their protection he'll feel safe enough to follow their advice.

Even then, as Webb points out, don't expect anything much to change until 2005. That's so Telecom can have a long tantrum - fighting the onslaught of change, as it most assuredly will, at every turn.

But eventually even it will have to accept competition has arrived.