23 December 2003 Media Statement

Commerce Commission report on unbundling released

The Communications Minister Paul Swain has released the Commerce Commission’s final report on unbundling the Local Loop Network and the Fixed Public Data Network.

Mr Swain thanked the Telecommunications Commissioner Douglas Webb and the Commission for its work on the report, which was required by the Telecommunications Act passed by Parliament in 2001.

Mr Swain also thanked those interested parties who made submissions.

The Minister will accept written comments on any new matters raised in the report that were not the subject of previous submissions to the Commission, and on any other relevant matters not addressed in the report.

It is expected that submissions on issues that have already been considered by the Commission during the public consultation process will not be made.

“The Commission’s report follows thorough consultation with the telecommunications industry and other interested parties," says Mr Swain.

This included the publication of an Issues Paper in April 2003, a Draft Report in September 2003, and a Public Conference in November 2003.

"I do not intend to replicate the consultation process undertaken by the Commission in its study."

"However, I have decided to provide interested parties with an opportunity to comment on any relevant matters that they have not previously commented on,” says Mr Swain.

Comments received by the Minister will be published on the Ministry of Economic Development website (www.med.govt.nz).

Such submissions, including a public electronic version, should reach the Minister by 9 February 2004. Any cross-submissions are due by 1 March 2004.

Once he has considered the report and any relevant comments from interested parties, the Minister will make a decision on whether or not to accept the Commission’s recommendations.

"I will now seek further advice from the Ministry of Economic Development on the implications of the final report," says Mr Swain.

"In due course I will be taking any recommendations to Cabinet, and I will be making no further comment till that process is complete. At this stage I aim to make a decision by May next year," says Mr Swain.

Copies of the report can be downloaded from the Commerce Commission website (www.comcom.govt.nz).

The Commerce Commission will brief the media on its findings at 1pm today.

The Commission has recommended the designation of the following two services:

- Unbundling of, and interconnection with, Telecom’s fixed Public Data Network in the form of access to an asymmetric DSL (ADSL) bitstream access service. The Commission recommends that the initial pricing and final pricing principles should be based on a retail minus methodology;

- Access to a backhaul transmission service used in conjunction with an asymmetric DSL bitstream service. The Commission recommends that the initial pricing should be based on benchmarking and the final pricing principle should be based on cost-based pricing (TSLRIC methodology).

The Commission has not recommended the unbundling of Telecom’s local loop network or of other elements of Telecom’s fixed Public Data Network beyond those supporting the asymmetric DSL bitstream service.

“I am advised by the Commission that Telecom will offer an Unbundled Partial Private Circuits service that has the potential to adequately address a major ‘bottleneck’ feature of the market for data services provided to corporates and other large users.”

Though the Commission is not satisfied that the proposal is suitable in its current form, the Commission believes that an opportunity should be allowed for industry negotiations to result in an enhanced service .

Should such an outcome fail to eventuate within the next six months, the Commission considers that it would be appropriate to re-evaluate the merits of regulated unbundling of a partial private circuits service at a long-run incremental cost price.

ENDSnz

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