Resale of Telecom broadband services for business

Media Release

Issued 8 December 2005/075

Decision on resale of Telecom broadband services for business

The Commerce Commission has released its final determination under the Telecommunication Act on resale by TelstraClear Limited of several Telecom broadband retail services for business.

The Commission has determined the price terms and non-price terms for the resale by TelstraClear of the Private Office Networking, One Office and Connect Anywhere (Remote Office) services. The decision also covers the Message Connect and Additional/Enhanced Directory listing services.

TelstraClear will have regulated access to these data services on a nationwide basis. The Commission has also determined that Telecom’s ‘One Office’ suite of services will also be available for resale by TelstraClear.

A further private data networking service, ‘Secure Business Internet’, is not available for resale by TelstraClear as the Commission has determined that it is supplied in a competitive market.

A summary of the key points of the determination is attached. The full determination is available on the Commission’s website at: http://www.comcom.govt.nz/IndustryRegulation/Telecommunications/Wholesale/Overview.aspx

ENDS

Commission media releases can be viewed on www.comcom.govt.nz

Summary

- On 4 November 2004, the Commission received an application from TelstraClear requesting that the Commission determine price and non-price terms for supply by Telecom to TelstraClear of six services that it considers are ‘non price-capped retail services offered by means of Telecom’s fixed telecommunications network’.

- On 3 December 2004, the Commission decided to investigate the Application, insofar as it concerned five of the services requested by TelstraClear. These services are Private Office Networking; Connect Anywhere (Remote Office); Secure Business Internet; Additional/Enhanced Directory Listing; and Message Connect. The Commission decided not to investigate Temporary Disconnection.

- On 9 September 2005, the Commission released a draft determination on the Application and invited submissions from interested parties.

- Private Office Networking and Connect Anywhere fall into a national retail market for the supply of private IP Virtual Private Network data services and Telecom faces limited competition in that market.

- Additional/Enhanced Directory Listing falls within a national retail market for the supply of directory assistance and Telecom faces limited competition in that market.

- Message Connect falls within a local access product market. The Commission distinguished between SME and corporate customers and also between geographic areas. The Commission found limited competition in the following three markets:

- a retail market for SME local access in metropolitan areas;

- a retail market for SME local access in non-metropolitan areas; and

- a retail market for corporate local access in non-metropolitan areas.

- Secure Business Internet falls within a national market for IT security solutions and Telecom does not face limited competition in that market for. The Commission does not require Telecom to wholesale its Secure Business Internet service to TelstraClear.

- The initial wholesale discount is 16%.

- Telecom must provide TelstraClear with adequate support services that are integral to the successful provisioning of the requested services. These support services are to be provided on a cost recovery basis;

- One Office Basic, One Office Active, and One Office Advanced all fall within the same product family as PON and are consequently replacement services for PON;

- Telecom must provide the services to the same standard as it supplies these services to its own internal retail sales and customer support groups; and

The expiry date of the determination is twenty-four months after the inception date.

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