TelstraClear will have bitstream access
20 December 2005/078
TelstraClear will have bitstream access: Commission
The Commerce Commission has released a final determination under the Telecommunications Act providing TelstraClear with regulated access to a wholesale bitstream service supplied by Telecom.
Bitstream is an input to the provision of broadband to consumers on Telecom's copper local access network. TelstraClear will combine bitstream with its own transmission and ISP services to create its own broadband services for customers.
"This decision gives TelstraClear the ability to compete and innovate in supplying broadband services across New Zealand" said Telecommunications Commissioner Douglas Webb.
"TelstraClear will be able to differentiate its services from Telecom's broadband services. The result will be more choice and greater competition."
Telecom is required to provide nationwide bitstream access to TelstraClear with the maximum downstream speed technically available (currently 7.6Mbps) and an upstream speed of 128kbps upstream, at a GST-exclusive price of $27.87 per month.
TelstraClear applied in November 2004 for the Commission to determine terms of access to the regulated bitstream service. Today's determination follows an extensive consultation process with the parties and the industry.
Telecom argued that allowing TelstraClear to provide high-speed bitstream risks degrading the quality of broadband services, particularly the services provided to rural customers. The Commission accepts that there is a risk, but notes that Telecom itself currently provides a significant number of high-speed services to retail customers and the risk will in principle be the same whether a high-speed service is provided by Telecom or TelstraClear. The Commission concluded that any risk of service degradation was outweighed by the benefits that high-speed services will deliver to users.
A copy of this decision
is available on the Commission's website at:
www.comcom.govt.nz/IndustryRegulation/Telecommunications/Wholesale/Whole
saleDeterminatons/telstraclearwholesalebitstreamserviceap.aspx
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 4 November 2004, TelstraClear applied
to the Commission for a determination of the terms of access
to the regulated bitstream service. This determination
follows an extensive consultation process with the parties
and the industry. Telecom is required to provide
TelstraClear with bitstream access which 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 TelstraClear to
innovate and differentiate its broadband offerings from
those of Telecom, providing significant long-term benefit to
New Zealanders. In considering the benefits of full-speed
services, careful consideration has been given to a risk
that full-speed services could degrade broadband services to
some customers located a significant distance from the local
exchange. This degradation could occur as a result of
increased 'noise' in copper cables sharing a common cable
sheath. The Commission has concluded that any such
incremental risk would not outweigh the benefits that
full-speed services will deliver to end-users. Telecom
itself currently provides a significant number of full-speed
services to retail customers. Any risk of degradation will
be the same whether a full-speed service is provided by
Telecom or TelstraClear. Telecom is required to provide
bitstream access to TelstraClear at a uniform wholesale
price which does not distinguish between customer type or
speed. Maximum innovation will occur where TelstraClear is
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 $27.87 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. Telecom is
required to make available, within specific timeframes,
electronic operational support systems to facilitate the
efficient provision of bitstream access to TelstraClear.
Telecom and TelstraClear agree that bitstream access will
be available to TelstraClear 18 working weeks after 31
January 2006. This determination applies for two
years. ENDS