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Telecommunications Act:Telecom meeting commitment

8 October 2004

Telecommunications Act: Telecom meeting commitment on Unbundled Partial Circuits

The Commerce Commission is satisfied that Telecom is meeting its commitment to offer its Unbundled Partial Circuits (UPCs) consistent with internationally benchmarked cost based pricing and therefore does not consider it necessary at this time to launch a further Schedule 3 investigation into unbundling the fixed Public Data Network

The decision follows a commitment made by Telecom on 25 June 2004 to introduce cost-based pricing for the UPC service by 30 September, with reference to an international benchmarking exercise carried out by the Commission. The Commission issued its benchmarking report on 3 September.

Manager for the Commission's Network Access Group, Osmond Borthwick, said the Commission had now evaluated Telecom's commercial UPC offer of 22 September against the benchmarked prices.

"The Commission is satisfied that Telecom's UPC offer is consistent with the benchmarked prices, and that the associated non-price terms are reasonable," he said.

A copy of Telecom's commercial UPC offer is available on the Commission's website at www.comcom.govt.nz/telecommunications/localloop.cfm


Background
In its December 2003 report to the Minister of Communications, the Commission did not recommend the unbundling of other elements of Telecom's fixed Public Data Network beyond those supporting the asymmetric DSL bitstream service.

The decision not to recommend unbundling of other elements was influenced by Telecom's announcement of an Unbundled Partial Private Circuits services offer that has the potential to provide a commercial solution to a competition problem in the supply of high grade data services to corporates and other large users.

The Commission believed that an opportunity should be allowed for industry negotiations to result in an enhanced service that would promote further competition. The Commission signalled in its unbundling report that should a successful negotiated outcome fail to eventuate by July 2004, it would be appropriate to re-evaluate the merits of regulated unbundling of a data tails or partial private circuits service.

On 25 June 2004, Telecom made a commitment to introduce cost-based pricing for the UPC service by 30 September, and to consult with the Commission and the industry on non-price terms. The Commission considered that this commitment was an important and relevant factor concerning its consideration of the merits of using its Schedule 3 powers and accepted that its satisfactory implementation would remove the immediate need to commence a Schedule 3 inquiry at that time. The Commission, however, retains its discretion to launch an inquiry should there be reasonable grounds to do so.

On 3 September, the Commission issued a final international benchmarking report.

ENDS


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