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Draft determination on TelstraClear service resale

Media Release

Issued 13 September 2005/no 030

Telecommunications Act: Draft determination on the TelstraClear application for resale of Virtual Private Network services

The Commerce Commission has released its draft determination relating to wholesale access by TelstraClear Limited to five of Telecom New Zealand’s business services. In particular, the Commission has determined the price terms, and a number of non-price terms, for the resale of three private data networking services, one business voice messaging service, and one directory service.

In the draft determination, the Commission has set out its view that the three private data networking services all fall within the same national retail market for the supply of private IPVPN data services. Accordingly, TelstraClear will have regulated access to these data services on a nationwide basis.

The Commission invites submissions on its draft determination by 23 September, and it expects to release its final determination in November.

The draft determination is available on the Commission’s website at http://www.comcom.govt.nz/IndustryRegulation/Telecommunications/
Wholesale/WholesaleDeterminatons/telstraclearretailservicesapplication.aspx

A summary of the key points of the draft determination is attached.

ENDS

Summary

i) On 4 November 2004, the Commission received an application from TelstraClear requesting that the Commission determine price and non-price terms for supply by Telecom to TelstraClear of six services.

ii) On 3 December 2004, the Commission decided to investigate the Application, insofar as it concerned five of the services requested by TelstraClear. These services are Private Office Networking; Connect Anywhere (Remote Office); Secure Business Internet; Additional/Enhanced Directory Listing; and Message Connect. The Commission decided not to investigate Temporary Disconnection.

iii) The Commission’s key conclusions in the draft determination are that:

- All five requested services fall within jurisdiction as ‘retail services offered by means of Telecom’s fixed telecommunications network’;

- The three data services fall into a national retail market for the supply of private IP Virtual Private Network data services and Telecom faces limited competition in that market.

- Additional/Enhanced Directory Listing falls within a national retail market for the supply of directory assistance and Telecom faces limited competition in that market.

- Message Connect falls within a local access product market. The Commission distinguished between SME and corporate customers and also between geographic areas. The Commission found limited competition in the following three markets:

­ a retail market for SME local access in metropolitan areas;

­ a retail market for SME local access in non-metropolitan areas; and

­ a retail market for corporate local access in non-metropolitan areas.

- The initial wholesale discount shall be 16%.

- The requested services are to be incorporated into the existing Designated Services Price List (DSPL) and the audit approach used in the earlier business wholesale determination is to apply.

- Telecom must provide TelstraClear with adequate support services that are integral to the successful provisioning of the requested services. These support services are to be provided on a cost recovery basis;

- Telecom should begin charging TelstraClear for the requested services not earlier than the time the service is reassigned to TelstraClear, and cease billing when the service is reassigned from or relinquished by TelstraClear;

- Telecom must provide the services to the same standard as it supplies these services to its own internal retail sales and customer support groups; and

- The expiry date of the determination is twenty-four months after the date of the final determination.

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