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Final Telecom TSO cost calculation for 2005/06

Telecommunications Act: Commerce Commission releases final Telecom TSO cost calculation for 2005/06

The Commerce Commission has released its telecommunication service obligations (TSO) determination covering the 2005/06 year. The final TSO cost is $58.2 million for 2005/06.

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 2005/06 will be shared between Telecom, TelstraClear Limited, WorldxChange Communications Limited, Vodafone New Zealand Limited, CallPlus Limited, Compass Communications Limited, Teamtalk Limited, Woosh Wireless 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 17 September 2008 on the Commission's website under Industry Regulation – Telecommunications – Telecommunications Service Obligations – 2005/2006 TSO Determination

Background 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 provide 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.

Commission media releases can be viewed at


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