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Commerce Commission places new Telecom VDSL services outside regulations

Thursday 18th February 2010

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Telecom can market new, high-speed VDSL broadband services without reference to regulations that govern the fixed line broadband market, the regulator has ruled.

In a draft decision issued today in response to a request for clarification from Telecom, the Commerce Commission says that Telecom can choose whether to offer high-speed broadband using the new, faster VDSL technology under the regulations or as a purely commercial offering.

"Telecom may use VDSL to deliver bitstream services with higher quality specifications than the regulated service, and can offer these services commercially," Telecommunications Commissioner Ross Patterson said.

Telecom welcomed the draft decision, saying it was "heartened" by the statement, which provides "an appropriate level of guidance and flexibility for us to deliver existing regulated bitstream services, whilst setting a clear path for the introduction of new enhanced services that technologies such as VDSL2 enable.

”The commission is reserving the right to carry out a review "to determine whether the commercial service should be added to the regulated service".

"However, VDSL technology is in its infancy in New Zealand (and).the Commission's preferred approach is to observe the performance of commercial VDSL serices in the market and only undertake a formal review under the Telecommunications Act if competition concerns emerge," Patterson said.

Telecom sought the clarification on whether VDSL was covered by the unbundled bitstream access (UBA) standard terms determination, with general manager of industry & regulatory affairs John Wesley-Smith saying the company’s wholesale arm expects to launch “specific VDSL-2 based services” this year.

“If VDSL and future technologies are subsumed into the existing EUBA (enhanced UBA) and BUBA (basic UBA) services without Telecom Wholesale having the ability to charge a premium, this will destroy the value to Telecom Wholesale and the industry in any other VDSL-2 based services,” Wesley-Smith wrote in his October letter to the regulator.

Telecom was forced to split its retail, wholesale and network businesses by the previous Labour-led administration to speed up the process of local-loop unbundling and improve internet services. Since then Telecom has changed out its senior executives and John Key’s government has taken power.

Growth in unbundling the local loop slowed in the first half of last year after Telecom launched a wholesale loyalty offer that eventually fell foul of the regulator.The company’s stock was unchanged in trading today at $2.34. Submissions on the draft decision are open until the end of business on March 5.

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