Chorus carve-out stokes competition, diminishes need for regulation

Stephen Gale

Telecom's spin-off of network operator Chorus into a separately-listed entity last year has stoked competition in backhaul services on the country's main copper-lines infrastructure and dimmed the need for regulatory oversight, the Commerce Commission says.

The regulator has just conducted its fourth competition review of backhaul services for the unbundled local loop (UCLL), unbundled copper low frequency (UCLF) and unbundled bitstream access (UBA), which lets telecommunications companies assess transmission capacity from those exchanges to offer services such as voice and broadband connection.

The commission will continue to keep tabs on 44 of the 215 UCLL/UCLF primary links between a local exchange and a main exchange where a telecommunications company can interconnect, and two of 38 regional links between those main exchanges, it says.

It had previously required regulation of 127 primary links of 168 reviewed and four secondary links.

"We're glad to see the [backhaul] market becoming more competitive as it's a key enabler of both UFB [Ultrafast Broadband] and [RBI] projects," Tuanz chief executive Paul Brislen told NBR.

"Assuming Vodafone is granted clearance to buy Telstraclear [the Commerce Commission will rule on October 23] we would hope to see yet more competition in backhaul services.

"All of which should flow through to the price we customers pay at the other end. I'd hope to see increased data caps and lower prices as a result"

Competitiion stems from separation
"The increase in competition is mostly due to the separation of Telecom in November last year," Telecommunications Commissioner Stephen Gale says. "At that time, Chorus and Telecom split the spare fibres on backhaul links so there was an immediate jump in competition for those links."

The government previously imposed regulation on Telecom's ageing copper network as part of an enforced operational separation of the Chorus unit amid fears the phone company was not selling access to those lines on equal terms, which subsequently extended into monitoring competition on the backhaul network.

That has become less of an issue since Telecom demerged with Chorus last year to free itself from that regulatory burden and let the network company successfully pitch for the government's subsidy to build a national fibre infrastructure.

Mr Gale says the regulator has also seen more backhaul investment by other telecommunications companies.

Of the links assessed, the commission found an appropriate level of competition on 80% of UCLL/UCLF backhaul primary links, 68% of UBA backhaul primary links and 95% of UCLL/UCLF and UBA backhaul secondary links.

Shares in Chorus rose 0.3% to $3.32 in trading today, while Telecom's stock gained 0.4% to $2.40.

With reportiing by BusinessDesk

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9 Comments & Questions

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What a breath of fresh air Stephen Gale is!


Don't understand this comment. He is just confirming the draft decision made by Patterson.


yes because they did such a great job with the telco market thus far... Perhaps they need more starch in their cardigans and walkshorts


Chorus needs to get its act together in Business connections, the current 8 week delay is often extended when issues are found at the last minute making the service less than satisfactory.
It favours the incumbent and the do nothing approach who unsurprisingly are predominately Gen-I, funny that!


Its still the same tune being played that has held NZ back in the the Telco space. We have seen Bell South come and leave , British Telecom, and now Telstra all leave with their competitive tails between their legs. Voda will be next. One things is for sure its not the genus business accument of Telecom that scr*wed them rather a completely unfair playing field that still goes on today.

Yea the Comm Com have done a great job


"Voda will be next" - This is the dumbest thing, I have EVER read!


I was in the game 15 years ago when Telecom broke competitive law, It took 11 years for the CC to prosecute the case and the resulting $10 mil fines are under protest meanwhile Telecom made 100’s of millions and laughed all the way to the bank. What joke the CC are!
Do the sales guys and their families who missed commission get paid… Na
Does anyone go to jail ….Na they become the CEO
Does anyone in the industry have faith in the CC….Na


Gale? More like Doldrums or Zephyr.
Today's outburst on leaky homes/apartments still being delivered at 30%; the 11 year 'holiday' referred to above, which Telecom pigged out in; the ongoing contempt of the international insurance industry for this country just further demonstrate that ;
1) NZers don't learn and don't hold their governments/bureaucrats/ guardians responsible, while paying them rock star packages
2) This 'light hand on the tiller' approach is straight out of BS-ville.
Wake up NZ.


Competition? Even if prices fall by yet another sizeable chunk people with still grizzle and grumble about the cost/speed etc of their broadband....

All we seem to have is less money being spent and funnily enough even less money being invested. In short those gimps from com com and a bunch of consumers who've been hyped into an unrealistic set of expectations because there was political adantage in doing so have combined to trash the telco market.

Awesome work


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