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ihug and CallPlus will have bitstream access

Media Release

Issued 22 June 2006/144

ihug and CallPlus will have bitstream access: Commission

The Commerce Commission has released a final determination under the Telecommunications Act providing ihug and CallPlus with regulated access to a wholesale bitstream service to be supplied by Telecom.

Bitstream is a form of transmission capacity on Telecom’s copper local access network. ihug and CallPlus will be able to combine bitstream with their national and international transmission capability and ISP services to support their retail broadband services.

“This decision follows closely a similar decision by the Commission late last year that allowed TelstraClear the right to obtain a regulated bitstream access service” said Telecommunications Commissioner Douglas Webb.

“ihug and CallPlus will be able to expand their retail service offerings by providing higher speed broadband. The result will be more choice and greater competition in the broadband market.”

Telecom is required to provide nationwide bitstream access to ihug and CallPlus with the maximum downstream speed technically available and an upstream speed of 128kbps upstream, at a GST-exclusive price of $28.04 per month.

ihug and CallPlus on 10 March 2006 filed applications with the Commission to determine terms of access to the regulated bitstream service.


A copy of this decision is available on the Commission’s website under Wholesale Determinations.

Background

Bitstream access is a circuit provided by Telecom between an end-user’s premises and an ATM switch. This circuit is used by a telecommunications provider to deliver retail broadband services. A telecommunications provider must supply other components including national and international transmission, connection to the internet and ISP services.

On 10 March 2006, ihug and CallPlus applied to the Commission for a determination of the terms of access to the regulated bitstream service. Specifically, ihug and CallPlus sought access on terms the Commission determined in Decision 568, or as otherwise determined by the Commission.

Telecom is required to provide ihug and CallPlus with bitstream access that has a downstream speed up to the maximum technical capacity of the DSLAM, and an upstream speed of 128kbps. The availability of full-speed bitstream access will allow ihug and CallPlus to innovate and differentiate its broadband offerings from those of Telecom, providing significant long-term benefit to New Zealanders.

Telecom is required to provide bitstream access to ihug and CallPlus at a uniform wholesale price that does not distinguish between customer type or speed. Maximum innovation will occur where wholesale customers are not constrained by Telecom’s own retail price and product differentiation strategies. The Commission has concluded that a uniform wholesale price will not remove incentives for ongoing diversity in retail broadband services available at different prices.

The Commission has determined that the price for bitstream access is $28.04 per month. The Commission deducted price elements attributable to service components not supplied by Telecom, by imputing a retail price having regard to Telecom’s comparable Jetstream services. A further allowance has been made to reflect those costs that Telecom avoids when providing bitstream access at wholesale rather than retail.

Bitstream access is to be provided by Telecom not later than 18 weeks after the date of the determination.

This determination expires on the earlier of:

(a) 24 months from the date of the determination; or
(b) When the service expires or is omitted from the Act

ENDS

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