Competition for wholesale broadband services remains limited

Media Release Issued 2 September 2011/No. 24

Competition for wholesale broadband services remains limited says Commerce Commission

The Commerce Commission today published its review of access to competitive broadband services and concluded that Telecom faces limited competition in this market. As a result wholesale broadband access will remain subject to the terms of the unbundled bitstream access (UBA) Standard Terms Determination.

The UBA service is a wholesale broadband service that allows telecommunications operators to differentiate their retail products from Telecom’s retail broadband services. Telecom is required to provide other telecommunications operators access to the regulated UBA service on request. In areas where Telecom faces effective competition, it would no longer be required to provide the regulated UBA service.

“In the wholesale market, there is no effective competition for the more than 50 per cent of end user lines served from cabinets,” said Dr Ross Patterson, Telecommunications Commissioner. “Competition in the retail market is limited because access seekers cannot provide voice services over cabinetised lines using their own exchange-based equipment in conjunction with UBA from Telecom. In our review, we concluded that the unavailability of this service has resulted in limited competition in the broadband access market. As a result, the terms of the STD will continue to apply across all areas in New Zealand” said Dr. Patterson.

The final determination can be found on the Commission’s website at: www.comcom.govt.nz/1st-competition-test-for-uba-std

This is the first competition review of the designated access service of Telecom’s UBA since the UBA service standard terms determination was issued in December 2007. The UBA service description in the Telecommunications Act 2001 requires that either– (a) Telecom face limited, or is likely to face lessened, competition in a relevant market; or (b) Telecom does not face limited, or is not likely to face lessened, competition in a relevant market, and the Commission has decided to require Telecom’s unbundled bitstream access to be wholesaled in that market The Commission released its draft determination in October 2010 and then sought submissions from interested parties on changes to the draft determination earlier this year. After considering submissions, the Commission issued a revised draft on 8 June 2011, followed by submissions on the draft in early July, and subsequent cross-submissions received on 22 July 2011.

Unbundled bitstream access

UBA refers to the service that enables access to, and interconnection with, the part of Telecom’s fixed public data network that connects the end-user’s building to Telecom’s first data switch (or equivalent facility) other than a digital subscriber line access multiplexer (DSLAM). The Commission’s Standard Terms Determination that regulates the price and non-price terms for the UBA service and related documents can be found at: www.comcom.govt.nz/unbundledbitstream- standard-access-service/

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