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Slower service for a higher price: duopoly stitch-up hurts broadband users

Media Release - January 3, 2006 - “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.

3 January 2006

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
“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 Davidson concluded.


Keith Davidson, Executive Director, 021 377 587

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