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Regulator gives Telecom reason to smile on VDSL after horror day

Friday 16th April 2010

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The Commerce Commission has given Telecom reason to smile after its horror day yesterday in confirming it can provide new, high-speed VDSL broadband services without being bound to existing rules governing the fixed-line broadband market.  

The country’s largest phone company can offer services that fall outside the existing unbundled bitstream access (UBA) rules using new Very high bit-rate Digital Subscriber Line (VDSL) services at a premium, provided it offers the wholesale services on the same terms to rivals as it does to its own retail unit. The Commerce Commission’s final decision on the issue comes after it had already flagged the win for Telecom in a draft decision in February.  

“VDSL is an emerging technology which is capable of delivering significant benefits to consumers such as increased speeds and facilitation of the development of innovative new services,” said Telecommunications Commissioner Ross Patterson in a statement. “It is important that incentives for investment in new DSL technologies such as this are preserved, so that consumers are able to receive the benefits associated with such innovations.”  

The news is a welcome boost for the phone company, which yesterday announced a reduction in its EBITDA forecasts for the coming three years amid rising regulation costs and competitive price pressures. Chief executive Paul Reynolds told analysts and media that the company would be sacking 200 management staff this financial year ending June 30, with more likely in the future. The shares were unchanged at $2.18 on the NZX today.  

State-owned Kordia, which owns rival internet service provider Orcon Internet, argued the decision gave Telecom a “regulatory holiday” for VDSL, and would erode the underlying policy objectives of the operational separation.

This was scotched by the regulator after Telecom gave assurances it would notify the Commerce Commission of new UBA services on a case-by-case basis, and that they would be offered under equal terms to all retail customers.  Vodafone NZ’s submission supported the draft submission.  

Telecom sought clarification from the regulator last year on whether VDSL was covered by UBA standard terms determination, and welcomed the draft decision in February.  

The phone company 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, and chief executive Reynolds yesterday said further separation to allow it to participate in the government’s broadband roll-out was still a possibility. 

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. 

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