Local Loop Prices Disappoint

Local Loop Prices Disappoint

Media Release – 7 November, 2007

InternetNZ (the Internet Society of New Zealand Inc) is disappointed at final local loop access charges, released today in a Commerce Commission determination.

The wholesale price for competing operators to access Telecom exchanges in urban areas has been set at $19.84 - up 20 per cent from $16.49 in a draft determination earlier this year. The price in non-urban areas is $36.63, an increase of 14 per cent from the draft price of $32.20.

InternetNZ Public Policy Committee Chair David Farrar says a drift upwards of such magnitude was not expected by the industry and is likely to have flow on effects.

“These prices are not insignificant and are more than we expected. It will ultimately mean tighter margins for competing LLU operators.”

The determination however means ISPs can now make final investment decisions. “It will encourage people to take advantage of the opportunities LLU provides and will, in theory, mean more money for the network division of Telecom to roll out fibre,” says Farrar.

InternetNZ is pleased that the Commission has retained the concept of de-averaged pricing in its final determination.

“Such a pricing structure is likely to lead to a greater investment in urban LLU than would have been the case with national pricing, and won’t significantly diminish non-urban investment,” Farrar notes.

ENDS

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