An Open Letter to the Commerce Commission: Commerce Commission must ensure viable broadband competition

An open letter from Orcon to:

Paula Rebstock
The Commerce Commission of New Zealand
PO Box 2351
Wellington 6140

29 April 2009

Dear Ms Rebstock,

Commerce Commission must ensure viable broadband competition

As in any market, competition is the single most critical factor in providing value to consumers in the New Zealand telecommunications market.

Take broadband. Unbundling the Local Loop was a huge step forward in ensuring that competition could flourish providing significant performance increases, price reductions and better quality service to consumers.

These benefits have not been obtained by technological advancements, rather by making it viable for companies such as Orcon to leverage these technological advances through investment in delivering a better broadband experience.

So specifically what have we seen as a result of Unbundling? 

• Residential broadband and home phone packages came down in price first in Auckland, and then nationally
• Telecom have responded to the improved performance competition, now customers across New Zealand generally have better broadband - one only need to look at the reports from Epitiro and IDC to see this
• Service levels have improved, as a result of more control over the broadband experience

Another significant milestone for progress in our industry is approaching, with the imminent release of the Sub-Loop Unbundling determination. Will this milestone ultimately benefit consumers? Or will it turn into another S92a and require expensive surgery?

For historical reasons, Telecom owns a substantial infrastructure. Its overdue investment in roadside cabinets has been the logical step in providing higher speed broadband services. It has always been Orcon's intention to build on our existing LLU investment and deliver increasingly superior performance by deploying our equipment in the cabinets.

However, we believe there is a very real risk that Orcon and companies like us will be precluded from investing any further in the New Zealand broadband market.  Telecom's proposed pricing would leave little room for even a modest return on our investment in sub-loop cabinet equipment. 

The Commerce Commission is charged with ensuring competition can thrive for the benefit of New Zealand citizens. 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.

Broadband in New Zealand is finally heading towards achieving a respectable performance level in the OECD rankings. To risk this would be folly.

Orcon urges the Commerce Commission to ensure viable competition results from its forthcoming determination on the regulated terms for sub-loop unbundling,

Yours sincerely,

Scott Bartlett
Chief Executive Officer
Orcon