Final determinations for unbundled local loop
7 November 2007
The Commerce Commission has issued its final determinations on the price and non-price terms on which Telecom must make unbundled copper local loop and co-location regulated services available to other telecommunications providers.
The Commission's determinations are complete commercial arrangements which will allow competitors to take the services from Telecom without the need for any separate agreements.
The local loop is the copper telephone wire that runs from a Telecom telephone exchange to an end-user's premises. Unbundling of the local loop will allow other telecommunications providers to use Telecom's copper network to deliver services to their own customers. The associated co-location service allows other providers to put their local loop equipment in Telecom's exchange buildings.
The final determinations set monthly rental charges for access to the local loop service at $19.84 per month for urban areas and $36.63 per month for non-urban areas. The charge for the transfer of a customer to the UCLL service is set at $74.83.
Telecommunications Commissioner Dr Ross Patterson says the prices in the determinations were set using international benchmarking, as required by the Telecommunications Act. While the Commission has applied the same methodology as it used in its July draft determination, the monthly loop prices are higher as some additional relevant prices were benchmarked in the final determination.
The determination contains a 15 month implementation plan commencing from the determination date. This will involve a soft launch at up to 15 exchanges during January to April 2008, and up to 15 further exchanges per quarter for the next year. This would result in up to 75 unbundled exchanges by April 2009.
Dr Patterson says local loop unbundling changed the competitive landscape in a number of OECD countries. "We expect to see the same results in New Zealand, where consumers will benefit from better prices, greater choice, and access to more innovative products."
The UCLL determination requires Telecom to provide forecasts and notice to telecommunications providers of any planned replacement of copper local loops from the exchange by fibre to the cabinet (cabinetisation). This will allow telecommunications providers to invest with confidence, without impeding Telecom from deploying more fibre in the network.
"I would like to thank all industry players for the spirit of cooperation which enabled the Commission to reach pragmatic solutions in relation to the non-price terms for access, and record the Commission's appreciation of the work done by the Telecommunications Carriers Forum in this regard," says Dr Patterson.
The Commission's determinations can be found on its web site www.comcom.govt.nz
Unbundled copper local loop. The unbundled copper local loop refers to the standard Telecom copper pair (telephone line) that runs from a Telecom telephone exchange to an end-user's home. Access to the local loop allows other operators to provide voice and broadband services to their customers using the standard copper pair.
Co-location. Access to Telecom's co-location service allows other operators to install their UCLL equipment in Telecom's local exchanges so that they can make use of the standard copper pairs. The monthly rental charges for co-location floorspace in exchanges are:
· Auckland and Wellington area, $20 per m2 per month
· Canterbury, Waikato, and Hawkes Bay area $14 per m2 per month
· Remaining areas $11 per m2 per month
Standard Terms Determination process under amended Telecommunications Act. On 22 December 2006, the Telecommunications Act was amended to incorporate a process for the Commission to make a standard terms determination on which a designated access or specified service must be supplied by Telecom to all access seekers requesting the service. A standard terms determination includes non-price terms proposed by Telecom, usually in consultation with access seekers, and price terms for access to the service set by the Commission.
Amended Telecommunications Act. In December 2006 an amended Telecommunications Act was passed that provides for, amongst other things, the unbundling of the local loop, and the implementation of local loop unbundling by way of standard terms determinations. The determination process was initiated for these unbundled services in early 2007. A draft determination was released on 31 July 2007. Interested parties then had the opportunity to provide submissions on the draft determination. The Commission held a conference in September 2007 to seek additional information on particular aspects of the submissions.