Report on Unbundled Partial Circuits

3 September 2004-05 /026

Telecommunications Act: Commission releases final benchmarking report on Unbundled Partial Circuits

The Commerce Commission today released its final benchmark report on Unbundled Partial Circuits (UPCs) following public consultation. This report relates to Telecom New Zealand Limited's commitment to the Commission in June 2004 to introduce cost-based pricing for the UPC service by 30 September 2004.

In its report to the Minister of Communications on local loop and public data network unbundling in December 2003, the Commission noted that there were likely to be substantial benefits from cost-based pricing of UPC where the service was delivered using legacy assets.

"This benchmarking report will allow the Commission to evaluate Telecom's commercial UPC offer, and ensure that the gains identified in the unbundling report are realised" said Douglas Webb, Telecommunications Commissioner.

A copy of the final benchmarking report is available on the Commission's website, www.comcom.govt.nz, select Telecommunications Regulation.

Background
In its December 2003 report to the Minister of Communications, the Commission did not recommend the unbundling of other elements of Telecom's fixed Public Data Network beyond those supporting the asymmetric DSL bitstream service.

The decision not to recommend unbundling of other elements was influenced by Telecom's announcement of an Unbundled Partial Private Circuits services offer that has the potential to provide a commercial solution to a competition problem in the supply of high grade data services to corporates and other large users.

The Commission believed that an opportunity should be allowed for industry negotiations to result in an enhanced service that would promote further competition. The Commission signalled in its unbundling report that should a successful negotiated outcome fail to eventuate by July 2004, it would be appropriate to re-evaluate the merits of regulated unbundling of a data tails or partial private circuits service.

On 25 June, Telecom made a commitment that it would introduce cost-based pricing for the UPC service by 30 September. The Commission accepted Telecom's undertaking on the basis of its commitment to cost-based pricing with reference to a benchmarking exercise carried out by the Commission. On 4 August, the Commission issued a draft international benchmarking report and sought submissions from interested parties.

ENDS

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