(Adds comments from Vodafone, background)
WELLINGTON -(Dow Jones)- New Zealand's telecommunications regulator on Thursday announced terms in which rivals of Telecom Corp. of New Zealand Ltd. (TEL.NZ) can access the dominant telco's unbundled sub-loop network.
Telecom is deploying 3,600 roadside cabinets, a process referred to as "cabinetization," which shortens the length of the copper lines used to connect customers to its network by using fiber between exchanges and the cabinets, allowing faster broadband speeds.
The Commerce Commission said it had set a monthly rental charge for competitors to access the cabinets at NZ$11.99 per urban line and NZ$22.14 per non-urban line.
The access to the cabinets owned by Telecom, New Zealand's largest fixed-line phone company by subscribers and revenue, stems from the government's move in 2006 to split its business into three operating units and open up its copper loop network to rivals.
The Commission said the average cost of building a roadside cabinet is NZ$972 per month and decided that for cabinet co-location, each party will pay a share of the cost of the cabinet based on the proportion of occupied space that it is using.
However, Vodafone Group Plc's (VOD) local unit, was extremely critical of the terms, stating they make it "unviable" for competitors to unbundle all but a few Telecom cabinets.
According to Vodafone, the decision has set backhaul costs at 10 times the costs outlined in the draft determination and co-location costs are 50% more than the draft determination.
"No one is going to provide competition if it means losing money hand over fist, after paying Telecom. This is before any of our own costs such as backhaul, cabinet equipment and marketing and support costs are considered," said Vodafone's General Manager Corporate Affairs, Tom Chignell.
Chignell said the decision also "cripples the wholesale market."
He said for Vodafone to compete in the wholesale bitstream market, it would need to pay up to NZ$184 per month to onsell a service to compete with Telecom wholesale's service, which costs NZ$47 per month.
Telecom didn't formally respond to the Commission's decision, and officials weren't commenting on Vodafone's statement. A spokesman for Telecom said the company was currently reviewing the decision, and may make a statement in the next few days.
-By Rebecca Howard, Dow Jones Newswires; 64-4-471-5990; rebecca.howard@dowjones.com