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Commerce Commission releases draft determination

Telecommunications Act: Commerce Commission releases draft determination on wholesale application

The Commerce Commission today released its draft report on TelstraClear Limited’s application for a determination to permit the resale of some services offered by Telecom New Zealand Limited. This draft determination deals with the terms, including price, for the wholesaling of a number of Telecom’s retail services to TelstraClear. A separate application has been made in respect of residential local access and calling services.

Services covered by the determination include business local access, national and international tolls, fixed-to-mobile services, directory assistance, toll-free services, messaging, narrowband access, broadband internet access and data services.

The draft determination, which includes an executive summary, is available in the Commission’s website, http:// (Telecommunications section, Commission Decisions).

“Within the Act, the Commission has the discretion to fix a wholesale price using a single discount off retail price for all services, or individual discounts for each service,” explained Osmond Borthwick, Manager of the Network Access Group at the Commission.

“A single benchmark discount offers considerable advantages in terms of convenience and simplicity of the regulatory framework. The Commission undertook a benchmarking exercise similar to that conducted in the interconnection determination process. This resulted in our surveying the discounts offered in 47 US states which adopt a similar resale regime.”

“Based on the data and information presented, the Commission has reached the preliminary view that the appropriate discount range for New Zealand is between 14.8% and 18.05%, before adjustment for additional costs associated with wholesaling.”

Mr Borthwick added that the Commission has concluded that this discount range could potentially apply to a total of 212 services depending on the level of competition in various markets.

“It’s important to bear in mind that this is an early stage in the process where the Commission is presenting its preliminary views on various aspects. From here, the parties have the opportunity to make submissions and comment at a conference the Commission plans to hold before the end of the year. Others with a material interest in the determination will also have the opportunity to participate in the conference.”

“After considering the information presented, the Commission expects to release its final determination early in 2003.” Background On 16 May 2002, TelstraClear Limited filed an application with the Commission for determination of designated access services under section 20 of the Telecommunications Act 2001.

On 18 July, the Commission gave notice to the parties that it had decided to investigate the application, insofar as it concerns relevant wholesale services. The Commission further decided not to investigate bundles of retail services offered by means of Telecom’s fixed telecommunications network and retail services offered by means of Telecom’s fixed telecommunications network as part of a bundle of retail services.

This draft Determination concerns the designated access service of “retail services offered by means of Telecom’s fixed telecommunications network” as defined within subpart 1 of Part 2 of Schedule 1 of the Act. There are four criteria that must be satisfied for a service in the application to fall within the description of a relevant wholesale service. The service must be: a retail service; non-price-capped; offered by Telecom to end-users; and by means of Telecom’s fixed telecommunications network.

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