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Top five telco issues that need sorting

Sarah Putt | June 28, 2013
Sarah Putt looks at the some of the hot button telco issues likely to be addressed in two upcoming government review.

Will a new law change be required to ensure higher copper pricing for Chorus — which is already benefitting from a $929 million taxpayer loan on favourable terms — to help with the UFB build? Or will the RSPs — including Telecom — get their way and pay less for the copper network?

Competition in mobile
On paper the mobile industry in New Zealand is a hot bed of competition. Three mobile network owners and a number of Mobile Virtual Network Owners (MVNOs).

But behind the customer numbers is a figure of more relevance — market revenue share. For example, third entrant 2degrees might have over 1 million connections in a market of around 4 million people, but it only has 12 percent market revenue share. And the Commission noted in its annual telecommunications report released in April that MVNOs have an "insignificant share of the market".

In addition, not only are Vodafone and Telecom dominant in the mobile market, but they are equally as powerful — now that Vodafone as bought TelstraClear — in the fixed line market.

The upcoming 700MHz spectrum auction — which enables 4G connectivity to be more ubiquitous — may be an opportunity for the government to set some rules to promote competition.

Vodafone and Telecom may not be able to use their superior market strength to outbid 2degrees or push auction prices up so high that even if 2degrees manages to secure spectrum, they won't have enough money to deploy services (although the company's relatively new network has been built to enable a 4G upgrade).

Submissions on a discussion paper on the auction were being filed as Computerworld went to print.

Meanwhile, the hope remains that an MVNO that offers unique and compelling services — perhaps one attached to a supermarket chain like Tescos in the UK — will come into the market and provide additional competition.

International connectivity
Many hopeful headlines have been written about alternative international cable systems to compete with the Southern Cross Cable (half-owned by Telecom) which connects New Zealand to Australia and the US.

Kordia's scheme for a trans-Tasman cable named Optikor fizzled out. Pacific Fibre's bold plan to connect New Zealand, Australia and the US never got off the ground.

There are a couple of longshots — a French-Caledonia bid called SPIN, and then Hawaiki, and Kim Dotcom's promise to build a second cable.

The only new cable that does appear to be being built is a tran-Tasman cable funded by Telecom, Vodafone and Telstra for US$60 million ($76.2m). Last month the telcos issued a tender inviting several international companies to bid to lay the Trans Global Access (TGA) cable.


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