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Telecommunications Act – Unbundling reviews

Telecommunications Act – Unbundling reviews: Commission launches additional investigation

Earlier this year the Commerce Commission commenced an investigation as required under section 64 of the Telecommunications Act 2001 into the desirability of unbundling Telecom’s local loop network and its fixed Public Data Network. In the course of this investigation, the Commission identified related issues which it considers should also be investigated at the same time.

In the light of the responses to the Commission’s Issues Paper on unbundling, released on 10 April 2003, the Commission has concluded that there are reasonable grounds to commence this additional investigation because:

· it is desirable to assess the full range of assets that may be involved in unbundling so as to provide a recommendation informed by all the relevant factors; and

· a review of types of unbundling which could be regarded as an alternative to those contemplated by the wording of section 64 has merit. It is more efficient, from a regulatory perspective, to consider these at the same time as reviewing the options as contemplated by section 64. This enables various options to be evaluated alongside each other so that the Commission is in a better position to recommend the option that best gives effect to the purpose statement of the Act.

Accordingly, it has decided to use its powers under Schedule 3 of the Act to expand the scope of the unbundling inquiry. The additional matters to be considered concern the desirability of regulating access to:
· the Main Distribution Frame;
· ancillary Services which may need to accompany unbundling of the local loop network or the fixed Public Data Network;
· co-location;
· backhaul;
· line sharing; and
· data backhaul over the Public Data Network.

The Commission intends to publish the draft report on unbundling on 18th September. The closing date for written submissions on the draft report will be 20 working days after notice of its publication, which will be by 16th October. This will be the closing date for submissions on both the section 64 and Schedule 3 investigations.

Background

Section 64 of the Telecommunications Act 2001 requires the Commerce Commission to conduct a review of the desirability of regulating access to the unbundled elements of Telecom New Zealand’s local loop network and access to the unbundled elements of, and interconnection with, Telecom New Zealand’s fixed Public Data Network (PDN). Unbundling of telecommunications networks is a means of allowing competitors to use parts of the network on a wholesale basis in order to build up a competitive offering of retail services.

The Commission commenced the investigations with the release of an Issues Paper and accompanying appendices entitled “Telecommunications Act 2001: Section 64 Reviews into unbundling the Local Loop Network and the fixed Public Data Network” on 10 April 2003. Under clause 1(1) of Schedule 3 of the Act, the Commission can launch an investigation on its own initiative if it considers there are reasonable grounds for doing so.

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