New questions have been raised on how Telecom’s cabinetisation plans will impact the future competitive landscape for fixed-line and broadband services.
This NBR article argues that it may be “commercially senseless” for Telecom rivals such as Vodafone and Orcon to install their own equipment into cabinets in a “mini-me version” of unbundling that has already taken place in Auckland and Wellington exchanges.
The story is based on an interview with Vodafone’s David Diprose who argues that physical space restraints in the Chorus cabinets and “lousy” wholesale terms could stall further competition.
He points out that 81% of households covered by Chorus cabinets lie within 2.5km of exchanges, some of which have already been unbundled.
Generally premises within this radius would be served adequately by the exchange, especially where ADSL2+ gear is already installed and a fibre backhaul is in place.
In the NBR article, Diprose argues that because cabinets cover connections to around half of urban customers, Vodafone finds itself locked out of 50% of the market in areas already covered by cabinets.
Cabinets being placed in between unbundled exchanges and large sections of users that Telecom rivals such as Vodafone and Orcon were hoping to reach by going into the exchanges in the first place, is a valid concern.
If competitors cannot get reasonable or commercially viable access to or via Telecom’s cabinets, then the hard fought local loop unbundling could effectively be bypassed.
It is no surprise that we hear, anecdotally, of Orcon and Vodafone being reluctant to sign up new customers to their networks where they know a cabinet will soon sever the direct connection between the customer and the exchange.
An overdue Commerce Commission determination on sub-loop unbundling is one mechanism that could address some of these issues.
The Commission released a draft determination last October, but its final determination is still in the works and it held a workshop at the end of last month to discuss the space allocation issues raised in submissions it received on the draft determination.
Another point to remember is that the original, now unbundled, copper cable will still run from the exchange past the cabinet and to the premise. However, once the cabinet is installed competitors will no longer have access to this cable, which in effect reverses the unbundling.
Meanwhile Diprose has also taken issue with new wholesale deal Telecom has offered to its “loyal customers”. He says Vodafone is effectively shut out of the deal as it does not buy all its network access through Telecom Wholesale.