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Local Loop Prices - The Good and Bad

If you're sitting in a trendy cafe in Ponsonby, Newmarket or Parnell, while reading this with your WiFi-connected laptop or your browser-capable 3G mobile phone -- today's column may seem a little irrelevant.

However, for the good number of people who are trying to run hi-tech businesses from outside the urban and suburban areas of NZ, there was a bit of rather bad news yesterday.

It seems that folks like this (which includes myself) will end up having to pay twice the price of you urbanites if we want copper-based broadband services.

But who really cares? After all, this price differential will only adversely affect around 30% of NZers.

Already the doomsayers are proclaiming that this will kill any prospect of serious investment in the rural broadband sector -- but I would have thought that exactly the opposite was true.

The way I see it, most ISPs are going to be unlikely to do much more than throw some DSLAMs in cabinets around the urban centres and take advantage of a quite low $16/month for access to Telecom's copper.

Don't get me wrong, this will be a good move forward for true competition but it's not going to do much to move us beyond the aging copper.

The NZ Herald's recent survey of readers revealed that much of that copper is already of questionable quality for carrying broadband traffic. It's unlikely that simply hooking a different ISP's hardware up to the same twisted pairs will see dramatic improvements there.

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Despite the relentless march of technology, pretty soon we're going to be running into the ceiling of aged-copper in terms of carrying hi-speed data over anything other than very short distances.

But why would anyone spend a fortune to lay fibre when they can rent Telecom's copper for $4 a week?

And why would anyone invest significant capital in establishing or expanding alternative technologies such as wireless when $4/week buys direct access to an urban customer?

In fact, I'm going to go against the trend and suggest that the pricing announced this week by the Commerce Commission is actually better news for rural users than for urban ones.

Even with the relatively cheap copper-rental figures being mooted, I don't see customers enjoying any significant reduction in DSL prices, nor do I see them enjoying much in the way of faster speeds.

In fact, by making this copper available for such a low price, the CC may well be condemning consumers to many years of "same-old, same-old".

By comparison, there would now appear to be much better opportunities in the rural market, especially the "fringe rural" areas that are just beyond the (sub)urban limits of a town or city.

It is surely far more attractive to go head-to-head with a $32/month service than a $16/month one?

Perhaps now, wireless operators and those willing to lay fibre to a few "rural" but well-populated areas (ie: lifestyle zones) can enjoy some real return on their investments, without the fear of Telecom knee-capping their profits by undercutting them at the last moment.

Although it's almost certain that I'll be paying more for my broadband if the CC's draft pricing is turned into a bona fide regulation, I remain cautiously optimistic that it will actually improve most non-(sub)urban users' prospects of actually getting a decent service at an affordable price.

What do you think of the CC"s draft proposal for ULL rates?

Are you worried that if the price is just $4/week for other ISPs to use Telecom's copper, nobody will bother laying their own cables or creating alternative delivery networks and therefore long-term performance will suffer?

Is this a blessing in disguise for rural broadband users?

Have your say on this...

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