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Slower service for a higher price

13 January 2006

Slower service for a higher price: duopoly

stitch-up hurts broadband users Media release - for

immediate release

"Today's announcement of a deal between

Telecom and TelstraClear on a range of wholesale matters is

good news for TelstraClear, but potentially bad news for

Internet users," said InternetNZ Executive Director Keith

Davidson, commenting on the late-afternoon release of

details of a settlement between the two companies.

The

deal covers discount for wholesale services including home

phone lines, lower interconnection rates and broadband

services.

"In particular the two Unbundled Bitstream

Service offerings – 256kb and 3.5mb downstream with 128kb

upstream – are inferior to plans that would have been

available to TelstraClear under the Commerce Commission s

UBS determination announced last year.

"Most New

Zealanders will only be able to get broadband at half the

speed they would have been able to get under the

Commission s determination.

"While this is better than the

offers currently available, it is truly a case of 'what

might have been'," said Keith Davidson.

"It is also a pity

that the two companies could not agree on a faster upstream

speed, given that their negotiations were not bound by the

regulatory framework. A lift to the 128kb upstream link

would have been a major improvement for New Zealand

broadband consumers.

"128kb upstream in an unbundled

Internet service is very slow; such a service is still not

true broadband and should not be described as such.

Comparative countries like the UK and Australia have true

broadband: so should New Zealand.

"This action today

simply shows that the current market structure and the

inadequate, light-handed regulatory framework applying to

telecommunications leads to unsatisfactory outcomes for

Kiwi consumers.

"We will look forward to seeing David

Cunliffe's response, when he makes his plans for regulation

public later this year," Keith Davids

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