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Final Telecom TSO cost calculation

Media Release

Issued 09 September 2008/no 030

Telecommunications Act: Commerce Commission releases final Telecom TSO cost calculation for 2004/05

The Commerce Commission has released its telecommunication service obligations (TSO) determination covering the 2004/05 year. The final TSO cost is $52.0 million for 2004/05. The determination specifies how the TSO cost is shared between Telecom and other operators whose networks are interconnected with Telecom’s fixed network.

Under the TSO, Telecom is obliged to provide certain local residential telephone services to residential customers who may not otherwise be provided with those services at an affordable price. The Commission calculates the cost of those services, which are met by the telecommunications industry.

Telecom bears approximately 69% of the TSO cost. The remainder is carried primarily by Vodafone and TelstraClear. The total cost for 2004/05 will be shared between Telecom, TelstraClear Limited, WorldxChange Communications Limited, Vodafone New Zealand Limited, CallPlus Limited, Compass Communications Limited, Teamtalk Limited and ihug Limited. The total cost is shared in proportion to their liable revenues.

A copy of the Commission’s final determination will be available by 1pm on Wednesday 10 September 2008 on under Industry Regulation –

Telecommunications –
Telecommunications Service Obligations – 2004/2005 TSO Determination

The Local Residential Telephone Service Obligations (TSO) is the successor to the Kiwi Share. The TSO was established by the Crown to recognise the economic costs that Telecom carries in

providing service to commercially non-viable residential customers who they would not otherwise rovide service to at an affordable price.

The Commission administers the TSO deed by:
- monitoring compliance of the TSO service provider;
- determining the cost faced by the service providers in accordance with the Telecommunications Act, unless the amount is specified in the deed;
- determining the liable persons; and
- determining the apportionment of this cost among the liable persons.

Once the TSO costs have been determined, the costs are shared among liable persons.

The ‘liable persons’ are Telecom and the companies operating public switched telephone networks (PSTN) that are interconnected with Telecom’s PSTN.
Media contact: Felicity Connell, Senior Communications Adviser


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