Telecommunications Act: Commission sets final TSO

Telecommunications Act: Commission sets final TSO cost

The Commerce Commission has today announced its calculation of Telecom New Zealand's net cost of complying with its telecommunication service obligations (TSO) for the period from 20 December 2001 to 30 June 2002.

The net cost is $34.72 million for the part year period, or $65.67million annualised. This cost is $7.78 million lower on an annual basis than the Commission's initial calculation of $73.45 million announced in June.

Telecommunications Commissioner Douglas Webb said the Commission received detailed submissions on its draft determination, which had resulted in its recalculation of the final cost.

"The Commission has used a higher cost of capital relating to the TSO business in the final decision," said Mr Webb. "Though the increased return on capital allowed to Telecom would have increased the net cost, this change was more than offset by the adoption of a wireless technology cap on the costs of remote customers, who were previously serviced by fibre-optic systems, and by other adjustments in the calculation process."

The net cost of the TSO is shared between Telecom and other network operators providing retail services during the period covered by the calculation.

Those operators are TelstraClear Limited, WorldxChange Communications Limited, Vodafone New Zealand Limited, CallPlus Limited, Compass Communications Limited, Teamtalk Limited, The Internet Group Limited (ihug) and Global One Communications (recently merged with Equant New Zealand Limited). The apportionment of the cost between Telecom and network operators is based on proportionate shares of telecommunications revenues as shown in the following table:

REPORTED CARRIER LIABLE REVENUES

For period 20 December 2001 - 30 June 2002 Liable % of TSO Charge Revenue total ($) ($)

Telecom 1,206,884,000 75.89% 26,352,406

Vodafone 301,232,000 18.94% 6,577,424

TelstraClear 74,879,000 4.71% 1,634,989

CallPlus 3,280,739 0.21% 71,635

WorldxChange 2,616,603 0.16% 57,134

Teamtalk 879,514 0.06% 19,204

Ihug 334,988 0.02% 7,314

Compass 184,559 0.01% 4,030

Equant 0 0.00% 0

Total 1,590,291,403 100.00% 34,724,137

A copy of the Commission's final determination is available on the website, www.comcom.govt.nz, select Telecommunications Regulation.

Note: The Commission has commenced the process of determining the net cost to Telecom of meeting its TSO obligations for the 2002/2003 financial year.

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