New Zealand telecom regulators last year approved Telecom New Zealand's split into separated retail, network and wholesale companies, on the BT model. On March 31, the separation has taken effect. Under the new structure, all contestants will be able to lease network access and transport services on the same terms and conditions Telecom itself pays to use network features.
If the plan works as expected, retail competitors will gain market share relatively quickly, while Telecom ultimately drops to less than half the market for mass market retail services.
You might wonder "what's in it" for Telecom, as it might appear the breakup makes it easier for competitors to compete using Telecom's network. That's true, to an extent. One reason U.S. tier one telecom incumbents don't want to share their optical access infrastructure is precisely because it is so expensive an undertaking that avoiding mandatory wholesale access to those optical access facilities makes highly unlikely few competitors will emerge (cable companies and a few overbuilders notwithstanding).So why might BT or Telecom go that route? Different "facts on the ground," for one thing. Cable companies in the U.K. and New Zealand markets are not so well developed as to constitute an access challenge for wired communications providers. So opening an optical access network to "all comers" actually works to decrease the likelihood any serious national "fiber to the customer" network will be built by anybody else.
So while Telecom will lose some retail market share, it will keep nearly 100 percent of wired optical and DSL access share. Telecom also heads off what might have been more onerous regulation.
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