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Good grief? What's happened? Has Telecom opened up its local loop to competition without the need for government intervention?

Well in a way they have, but not perhaps to the extent that some would like.

In this deal, TelstraClear seem to be reselling the Telecom service -- in much the same way that most ISPs resell a version of Telecom's DSL plans.

The margins that TelstraClear make on this home-phone deal are, according to reports, pretty dismal and the company is hoping to offset that by making a truckload of money from selling the value-add services it offers to those who defect from Telecom.

TelstraClear has a long row to hoe however, because Telecom has been working its little backside off to try and lock customers into its own services.

Want broadband DSL as well as a home-phone service?

Well if you defect to TelstraClear while keeping Telecom as your DSL provider then you'll get hit with their disloyalty fee that will hike your monthly broadband costs quite significantly.

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You might wonder why on earth Telecom would allow a competitor like TelstraClear to effectively resell its core product -- voice-line connections to the home.

Well the answer to this is pretty obvious if you think hard enough.

Telecom knows that the analog voice-line service is reaching the end of its useful life. If we look just five years ahead, I think you'll find that most voice communications will be done using VOIP and (s)he who owns the broadband market will also own the voice/tolls market.

So, by appearing to play nicely and allow TelstraClear to share its network for voice calling, Telecom is again able to tell the Commerce Commission "look, we're already opening ourselves up to competition" -- while snickering all the way to the bank.

After all, the TelstraClear reseller arrangement is a fantastic deal for Telecom. They get to earn good percentage of every penny their competitor charges its customers for their phone rental yet the don't need to worry about the cost of running a billing, faults or directory service for those individual lines. Who knows, Telecom's profit margin per line may even be higher for TelstraClear customers than it is for their own.

And meanwhile, they continue to ramp up their promotion of Telecom DSL-based broadband products so as to cement their grip on the future.

So, I wasn't at all surprised to see those ads on the weekend, it fits very nicely into Telecom's long-term plan and to be honest, I think TelstraClear have simply been a pawn in Telecom's long-term game-plan.

My hat is off to Theresa and her team of strategists -- well done that girl!

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