Thursday, July 14, 2005

Dear Bernard...

I don't believe it! I got a reply to my email.

Dear Bernard Woolley

Thank you for your letter, via email, dated 21 June 2005 regarding your concerns over Telecom's network outage on 20 June 2005 and the relationship this has with the decision not to unbundle the local loop in 2004.

As Minister of Communications, I am replying on behalf of my colleague Hon Paul Swain.

New Zealand's telecommunications infrastructure is of crucial importance to our economy. I have stated publicly that I believe the Telecom network outage was a "freak occurrence" and not related in any way to the current industry regulatory structure, however I am concerned that this outage occurred at all, and have asked Officials to look at how Government can work with the industry to ensure that we maintain a robust as possible network.

Your statement that the unbundling of the local loop would have reduced the risk of this outage occurring is not accurate. Except in a general sense of potentially improving competition, the Local Loop Unbundling (LLU) decision would have had no effect upon the recent Telecom outage. LLU would not have provided incentives for operators to establish their own alternative backhaul network as your comment suggests, thereby avoiding the network outage.

The broader issue here is about industry participants, such as Telecom and Telstra being able to use each others networks in emergencies to ensure minimal disruption to the provision of telecommunications services for New Zealand. I am advised however that in some cases the two networks are either on the same fibre cable or that the cables run side by side. As such the cause of the outage may well still have the same impacts even if there was better co-ordination within the industry.

Local Loop Unbundling and Unbundled Bitstream Services (UBS) are much the same in the way they operate. The only difference is the DSLAM equipment in the exchange that enables the services to be provided. UBS allows other network operators to use the Telecom equipment. All the cables stay with the original owner.

The government remains committed to a regulated UBS, as it enables Telecom's competitors to develop and provide their own broadband services without reliance on resale of Telecom's Jetstream service.

You may also be aware that a review of the Telecommunications Act is underway at the moment, and this should bring further improvements for consumers. One of the key areas the review will look at is the development of competition within the broadband market (including the introduction of new telecommunication services). It will look at the speed that competitors take up the regulated services, monitoring of the industry, and enforcement practices around the regulations. The review is also considering ways to better address the resolution of users' telecommunication service complaints that cannot be resolved directly by the parties.

Yours sincerely

Hon David Cunliffe
Minister of Communications

I don't want to spend much time mulling it before bed - or writing a detailed reply. I submit that the Minister is probably correct on the LLU and UBS points. I will be writing a reply to discuss network robustness in more detail however, as I don't believe the event should be seen as a freak incident.


Blogger David Farrar said...

Cunliffe is actually pretty good in this area. Remember Swain recommended LLU and it was Clark that vetoed it.

7/15/2005 03:02:00 AM  
Blogger Bernard Woolley said...

Yes, it was Clark and the Cabinet that voted no for LLU. I do hope Webb starts harrassing Telecom a little more though. I am still convinced that Telecom wasn't unbundled because our sharemarket would have taken a hammering - given that Telecom represents 18% of the NZX market (as per NZX website today) and is a de facto stock for investment in New Zealand. The only reason I can see is that unbundling would have hammered TEL in the market, and this would have tranferred through to the rest of the economy.

7/15/2005 01:19:00 PM  
Anonymous Anonymous said...

Spot on reasoning Meanwhile we slip further and the risk increases Telco and energy are 2 of the most serious future risks we face.And wheres the planning to avoid it? Its all hope and pray stuff!

7/15/2005 03:45:00 PM  

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