Draft Determinations for Unbundled Local Loop

Draft Determinations for Unbundled Local Loop

The Commerce Commission has issued its draft determinations on the price and non-price terms on which Telecom must make unbundled copper local loop and co-location regulated services available to other telecommunications providers. These are the services required to unbundle the local loop.

The local loop is the copper telephone wire that runs from a Telecom telephone exchange to an end-user's premises. Unbundling of the local loop will allow other telecommunications providers to use Telecom's copper network to deliver services to their own customers. The associated co-location service allows other providers to put their local loop equipment in Telecom's exchange buildings.

The Commission's determinations are complete commercial agreements which will allow competitors to take the services from Telecom without the need for any separate agreements.

"These draft determinations are a crucial step in transforming New Zealand's telecommunications industry," says Telecommunications Commissioner Dr Ross Patterson.

"It is important to note however that these are only draft determinations, and further consultation will now be undertaken."

The draft determinations set monthly rental charges for access to the local loop service at $16.49 per month for urban areas and $32.20 per month for non-urban areas. The draft charge for the transfer of a customer to the UCLL service is set at $83.70.

Dr Patterson says the prices in the draft determinations were set using international benchmarking, as required by the Telecommunications Act.

Submissions on the Commission's draft determinations are sought from interested parties. The closing date for these submissions is Wednesday 29 August 2007.

After consultation on these draft determinations, final determinations will be made by the Commission in November 2007.

Telecom will begin to roll out the service two months after the final determinations are made, and local loop unbundling will progressively be available six months after the final determinations.

The Commission's determinations can be found on its web site www.comcom.govt.nz
Local loop: IndustryRegulation/Telecommunications/
StandardTermsDeterminations/UnbundledLocalLoopService

Co-location:
IndustryRegulation/Telecommunications/
StandardTermsDeterminations/UnbundledLocalLoopCoLocationService

Background

Unbundled copper local loop. The unbundled copper local loop refers to the standard Telecom copper pair (telephone line) that runs from a Telecom telephone exchange to an end-user's home. Access to the local loop allows other operators to provide voice and broadband services to their customers using the standard copper pair.

Co-location. Access to Telecom's co-location service allows other operators to install their UCLL equipment in Telecom's local exchanges so that they can make use of the standard copper pairs. The draft monthly rental charges for co-location in exchanges are:

• Auckland and Wellington area, $20 per m2 per month
• Canterbury, Waikato, and Hawkes Bay area $14 per m2 per month
• Remaining areas $11 per m2 per month

Standard Terms Determination process under amended Telecommunications Act. On 22 December 2006, the Telecommunications Act was amended to incorporate a process for the Commission to make a standard terms determination on which a designated access or specified service must be supplied by Telecom to all access seekers requesting the service. A standard terms determination is comprehensive enough and contains sufficient detail so that there is no need for an access seeker and Telecom to enter into a separate agreement for provision of the service. A standard terms determination includes non-price terms proposed by Telecom, usually in consultation with access seekers, and price terms for access to the service set by the Commission.

Local Loop Unbundling. The Telecommunications Act 2001 required the Commission to make a recommendation as to whether the local loop should be unbundled. In 2003 the Commission recommended against local loop unbundling and the Government accepted this recommendation. In 2006 the Government decided that the local loop should be unbundled.

Amended Telecommunications Act. In December 2006 an amended Telecommunications Act was passed that provides for, amongst other things, the unbundling of the local loop, and the implementation of local loop unbundling by way of standard terms determinations. The determination process was initiated for these unbundled services in early 2007 and it is anticipated that the Commission will issue a final determination by the end of this year.

Telecommunications Commissioner. Dr Ross Patterson was appointed Telecommunications Commissioner for a five-year term beginning 12 July 2007. Dr Patterson is a New Zealand lawyer with a PhD in commercial law. For the last ten years he has been working in Sydney, Australia as a partner of Minter Ellison Lawyers, where he was head of the firm's competition and regulatory practice.

ENDS

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