The Commerce Commission has issued a draft decision today after reconsidering the pricing aspects of Decision 582.
Decision 582 was made by the Commission in June 2006. It sets the price at which Telecom must sell its Unbundled Bitstream Service (UBS) to ihug and CallPlus. UBS is the service used to deliver broadband internet.
After Decision 582 was issued, ihug and CallPlus requested that the Commission reconsider the pricing aspects of the decision.
The Commission reconsidered Decision 582 and reviewed the methodology used. The draft decision issued today presents a revised pricing methodology.
The Commission has called for submissions on the draft decision, and intends to issue a final decision later in the year. In the meantime, Decision 582 remains in full force.
It is important to note that the price calculation in today's decision is included for illustrative purposes only. A definite price, based on updated data, will not be available until the final decision is released. The Commission will consult on the relevant input data.
The Commission has received complaints under the Fair Trading Act in relation to the advertising of broadband speeds, and complaints under the Commerce Act that Telecom has used its market power to introduce a retail bundle of broadband and calling services. Investigations into these matters are continuing.
Unbundled Bitstream Service (UBS) is a service provided by Telecom to carry internet traffic. Telecommunication companies have a right to buy UBS from Telecom at a wholesale price. They can then use their wholesale UBS to offer retail broadband services in competition with Telecom.
The Commerce Commission is responsible for deciding the price that Telecom can charge for UBS. It does this when requested to by companies wanting to buy UBS.
In March 2006 ihug and CallPlus asked the Commission to determine a price for them. The Commission issued Decision 582 on 22 June 2006, setting the UBS price at $28.04 plus G.S.T. per month.
In December 2006 ihug and Callplus each separately applied for reconsideration of the pricing aspects of Decision 582.
