So what about wholesaling then?
Yet CallPlus, Orcon and Vodafone claim to have been led down the garden path on local loop unbundling and Telecoms cabinetisation plans.
Now they will be turning their attention to the wholesale market. The Commerce Commission will set the final prices for unbundled bitstream next week.
If LLU in urban centres is an unattractive proposition under the circumstances, perhaps wholesaling Telecoms network will afford more opportunity?
What is actually about to play out in the wholesale market could quickly become very ugly, however.
Already, under the existing wholesale regime, CallPlus and ihug have complained of price- gouging %26ndash; the margin between wholesale prices and Telecoms retail prices being so small that there is no room for them to cover costs, let alone make a profit.
Telecommunications is a scale business, Telecom is the biggest provider, and its retail arm should be capable of undercutting smaller competitors when all are faced with the same network access costs.
The only retailer that may have a realistic chance of undercutting Telecom is Telstra. That is if it can leverage its economies of scale as a trans-Tasman carrier and longline next- generation services to New Zealand out of Australia.
Were this to happen, this could have a crippling effect on the domestic ICT sector and local innovation. But that is the risk the Government chose to take when it announced its industry reforms in May last year.
It might be drawing a long bow to blame those reforms for the unhappy experience that people have had to date with Telecoms outsourced e-mail and web portal provider YahooXtra, or its outsourcing of some tech support to the Philippines.
But one way for Telecom to compete with Telstra in the long run, is to mimic its rivals scale advantage through such international partnerships.
While Telecom Retail and Telstra await their own David and Goliath end game, smaller telcos will be aiming to eke out a living by bundling loss-leading broadband products with toll calls, which still provide high margins.
Former Telecom strategist John Crook recently argued in an interesting submission to the Economic Development Ministry that only historic vagaries were propping up the toll call market and that these had resulted in uneconomic entry by telcos that did not have the underlying cost structures or value propositions to compete.
The best that can be hoped for is a few tidy fire-sales. But it would probably come as no surprise, in the current climate, if some second-tier telcos fell over without much further warning.
This might be an opportune time for the industry to turn its mind to how it might deal with that scenario. How would customers be transitioned to other providers, and what rights would they have in that process? Saying that no-one saw that one coming wont convince.
