The Commerce Commission today released draft telecommunication service obligations (TSO) determinations for the 2004/05 and 2005/06 years.

The determinations give the Commission's assessment of the net cost Telecom incurs in meeting its TSO obligation to provide local residential telephone service. Telecom is obligated to provide service to residential customers who may not otherwise be provided with service at an affordable price. The determinations also apportion the cost between Telecom and other operators whose networks are interconnected with the Telecom fixed network.

The 2004/05 Draft TSO cost is $71.4 million.

The 2005/06 Draft TSO cost is $78.3 million.

Telecom bears 69% of the TSO cost. The remainder is carried primarily by Vodafone and TelstraClear. The draft costs are broadly in line with cost of $64 million for 2003/04. The increase in the cost are mainly the result of increases in the cost of capital.

The cost for 2004/05 when finalised will be apportioned between Telecom, TelstraClear Limited, WorldxChange Communications Limited, Vodafone New Zealand Limited, CallPlus Limited, Compass Communications Limited, Teamtalk Limited and ihug Limited in proportion to their net liable revenues. The 2005/06 TSO when finalised will be apportioned across the same parties with the addition of Woosh Wireless Limited.

Interested parties are invited to make submissions on the determination. The closing date for submissions is Monday 6 August 2007 at 5pm. The Commission does not anticipate that it will be necessary to hold an industry conference on this matter.

A copy of the Commission's draft determinations will be available on its website by 1pm 9 July 2007, www.comcom.govt.nz; select Telecommunications

Background

The Local Residential Telephone Service TSO is the successor to the Kiwi Share. The TSO was established up by the Crown to recognise the economic costs that Telecom carries in providing service to commercially non viable residential customers who they would not otherwise provide service to at an affordable price.