In the letter, Orcon CEO Scott Bartlett says local loop unbundling was a huge step forward in improving competition in the local telecommunications market, allowing his company to invest in delivering a better broadband experience.

However, he says there is now a “very real risk” that Orcon and other ISPs will be precluded from investing any further in the broadband market.

At heart of the issue is sub-loop unbundling – the process through which other operators will gain access to Telecom’s roadside cabinets.

The Commerce Commission is due to release a determination on sub-loop unbundling that will regulate access to the cabinets. This will include how much Telecom charges other providers for access.

However, Orcon believes Telecom's proposed pricing would leave little room for even a modest return on its investment in sub-loop cabinet equipment.

This is a crucial point and one also previously raised by Vodafone.

In an interview with NBR, Bartlett explains that it would cost Orcon $630 a month to rent space for its equipment in a cabinet, plus a further $700 to $900 in backhaul charges. In addition, it would have to pay $130 to connect each new customer to a cabinet, compared to $75 for an unbundled exchange.

At these rates, Bartlett says Orcon would need 20 to 25% market share in any given neighbourhood to make installing its own gear worthwhile.

What is at stake here is the future of the hard-fought-for gains achieved through local loop unbundling.

Many of the roadside cabinets are being installed around exchanges that have already been unbundled.

A ring-fence of cabinets around an unbundled exchange effectively cuts off companies like Orcon and Vodafone’s access to a large number of users who would then no longer have a direct link to the exchange.

In fact both Orcon and Vodafone say that cabinets could effectively shut them out of half the residential broadband market.

Therefore, it is not surprising that in its letter Orcon refers to the Commission’s upcoming determination on sub-loop unbundling as “another significant milestone for progress” in the telco industry. In the letter Orcon urges the Commission to ensure viable competition results from its determination.

Bartlett writes: “If companies such as ours cannot gain viable access to cabinets, competition will wilt and eventually die. And consumers will still be paying too much.”

This highlights why it is imperative that fair access to the cabinets is secured. If not, the clock will be turned back on the advances achieved through local loop unbundling.