TelstraClear to shut down pilot wireless network

Monday April 16, 2007

TelstraClear to shut down pilot wireless network in Tauranga

TelstraClear's pilot wireless network in Tauranga is to be shut down because of a deliberate last minute change by Vodafone that meant the service would be uncompetitive.

TelstraClear Chief Executive Dr Allan Freeth says an eleventh hour change to a key component of its roaming arrangements has forced the company to make the tough decision to halt the project and focus on investments in existing and new services.

"We had a national roaming agreement and an additional agreement to make the changes that would allow us to deliver Unplugged. We proceeded on that basis," says Dr Freeth.

"We even provided a joint statement to the Commerce Commission setting out that we had agreed the changes necessary for Unplugged to launch," he says.

Problems with entry to the mobile market are well known. TelstraClear has received and will comply with the Commerce Commission's Section 98 notice requesting all documents and correspondence relating to commercial negotiations between Vodafone and TelstraClear around Unplugged.

The pilot network had been on track for launch in July, was tested as planned and would have delivered a converged mobile/broadband service to homes and businesses throughout Tauranga city.

Dr Freeth says Vodafone's late change forced TelstraClear into an untenable position.

"We could delay our launch and lose many months pursuing legal action or persuading Vodafone to revert to its previous position. In the interim, Vodafone would go to market with its own service."

"Or, we could push ahead with the July launch of a service Vodafone's late change had made unattractive and uncompetitive."

"Either course was unacceptable, so we made the tough decision to shut down the network and invest in other services."

"Vodafone's agenda, despite public insistence it is pro-competition, has been all about buying valuable time to, what appears to us, secure a clear-run for its own service."

Dr Freeth says the decision will be disappointing for Tauranga and for TelstraClear staff, however, the company could not continue with a project that would destroy shareholder value.

"We set an ambitious timetable and had nothing but support and an open door from the Tauranga community. We are especially grateful to Tauranga Mayor Stuart Crosby, the City Council executive, Priority One and the Tauranga Chamber of Commerce and would like to thank them for their unstinting support."

Dr Freeth says TelstraClear will focus its investment on its fixed line business, leveraging broadband services in its own network and investigating the opportunities created by unbundled local loop access.

TelstraClear has been at the vanguard of competitive change in this country for over 15 years and is excited by the potential offered by the new environment, although Dr Freeth noted that the speed and scale of any investment will depend on the detail of price and terms of unbundled local loops.

"Where we can compete without obstruction we deliver better services and value to customers than anyone else in New Zealand. In the past year customer numbers grew by 10 percent on our Wellington and Christchurch networks and more than 40 percent of those customers have broadband, with speeds of up to 10 Mbps available," he says.

"Recently, we won the contract to provide fixed line triple play packages to the new Pegasus Township north of Christchurch. We look forward to investing so that these services can be extended to other communities as access becomes available."

"While the news today is clearly a disappointment for us, and New Zealand, it's just one of the many trials and ideas that TelstraClear will continue to pursue to bring the benefits of competition and technology to New Zealand consumers and businesses."

ENDS

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