Wellington, June 18 NZPA - The days of improving broadband price, speed and service may be coming to an end following the release of conditions for sub-loop unbundling, the boss of telco Orcon warns.

A sub-loop determination from the Commerce Commission today failed to protect the interests of broadband consumers, Orcon chief executive Scott Bartlett said.

Instead it opted for a pricing structure that inevitably would lead to market domination by a single player.

"The commission's decision not only prices Telecom competitors out of the game, it also lacks any alternatives for continued investment in local loop unbundling, taking us back to the bad old days."

His sentiments were shared by Vodafone. Vodafone's general manager corporate affairs, Tom Chignall, said today's decision made it almost impossible to make a business case to unbundle all but a few cabinets.

The commission today released the terms, including prices, under which Telecom has to allow competitors access to the 3600 roadside cabinets it is deploying throughout the country.

Under cabinetisation, fibre optic cable is run from telephone exchanges to roadside cabinets, shortening the length of copper lines to customers and allowing new, faster services.

The sub-loop is the link between the distribution cabinets and an end-user's building. It is a sub-set of the full local loop, which is the copper telephone line that runs from a local telephone exchange building to a customer's premises.

Mr Bartlett said the main issue was backhaul, the price for connecting the cabinet to the internet. The commission said access to the sub-loop services would allow Telecom's competitors to take advantage of the shorter copper telephone lines resulting from cabinetisation.

It acknowledged the combined cost per customer for the unbundled sub-loop services was about 26 percent higher than the corresponding costs for local loop unbundling,

At the same time, the commission also said service providers would be able to provide customers with higher-value services over the sub-loop services.

But Orcon's Mr Bartlett said that was a "very big assumption", given the state of the economy and the pressure on prices.

"With this determination, any player would need between 25 and 30 percent market share to engage in sub-loop unbundling. That's about as much as the entire non-Telecom industry players combined," Mr Bartlett said.

"The service is prohibitively expensive -- we simply cannot see any one player having the necessary fixed-line market share to deploy new infrastructure, certainly no single player does today."

Telecommunications Users Association (Tuanz) chief executive Ernie Newman said the commission had a very difficult job.

The new entrants had gone into local loop unbundling in good faith and been caught short, but Telecom could hardly slow down cabinetisation.

It was one thing for a competitor to Telecom to go in and put some equipment into an exchange and get 5 percent market share of tens of thousands of lines, Mr Newman said.

It was quite a different matter to put the equipment into a street cabinet and get 5 percent market share of a few hundred lines.

"The economics of unbundling change dramatically once you put those cabinets in, and only time will tell whether people are able to make some money out of it."

A Telecom spokesman said the company needed time to work through the decision in detail before being able to comment.