Final determinations for backhaul services

The Commerce Commission has today released its final determinations on the price and non-price terms for the backhaul services that support the unbundled copper local loop (UCLL) and unbundled bitstream (UBA) broadband services.

These services will allow Telecom's competitors to get access to transmission capacity between Telecom's local exchanges or data switches, and the competitors' networks.

"Having backhaul for both the UCLL and UBA services available will allow companies to offer broadband and voice services to their customers without having to build their own networks all the way to their customers. Instead, telecommunications companies can use Telecom's network and pay Telecom a cost-based price for the service," Telecommunications Commissioner Dr Ross Patterson said today.

"Backhaul for UCLL is regulated only where Telecom faces limited competition. The Commission has determined that Telecom currently faces competition in most North Island primary and secondary links of the UCLL Backhaul Service. The Commission has however assessed that Telecom faces limited competition on most South Island primary and secondary links."

"The regulation of these backhaul services will stimulate competition for retail customers, for the long term benefit of those customers, as well as reducing unnecessary duplication in network costs. This is another important facet of improving competition in broadband telecommunications markets," Dr Patterson said.

"These determinations have been set after consultation with the telecommunications industry," said Dr Patterson.

These determinations follow the Commission's final determinations for the UCLL and Co-location services released in November 2007 and for the UBA Service released in December 2007. The Sub-loop Unbundling Determination is expected to be released by the end of 2008.

Summary of final determinations

UCLL Backhaul Standard Terms Determination (STD)

The conditions for the UCLL Backhaul Service require the Commission to identify the markets in which the UCLL Backhaul Service is supplied and the state of competition in those markets.

The Commission intends to review its assessment of competition periodically in order to ensure that the regulated UCLL Backhaul Service is available only on links where Telecom faces limited competition.

UBA Backhaul STD

The UBA Backhaul Service is designed to support the Enhanced UBA Service, which allows for the delivery of real-time services such as VOIP. The Commission expects that Telecom will provide a commercial Basic UBA backhaul service on a per user basis.

The Commission will monitor the provision of commercial backhaul services and their suitability in respect of the Basic UBA service. In the event that a backhaul service for the Basic UBA Service is not offered on a commercial basis on reasonable terms, the Commission will consider determining the price and non-price terms for such a service.

Price terms set by the STDs

The Commission has determined the following monthly rental rates that an access seeker pays to Telecom for the UCLL Backhaul Service:

The Commission has determined the following monthly rental rates that an access seeker pays to Telecom for the UBA Backhaul Service:

For radial distances in excess of 25 km, the price of both backhaul services is set according to a formula that takes into account the bandwidth and radial distance of the service.

The Commission has also determined that the new connection charge that an access seeker pays to Telecom for the UCLL Backhaul Service is $4,030 for a new connection at one end and $8,059 for a new connection at two ends. The new connection charge for the UBA Backhaul Service is the same.

The UCLL Backhaul service is due to be delivered by Telecom no more than 100 working days after the release of the UCLL Backhaul STD. The UBA Backhaul Service is due to be delivered by Telecom no more than 150 working days after the release of the UBA Backhaul STD.

The Commission's UCLL Backhaul and UBA Backhaul determinations and related documents, including executive summaries, can be found on its web site www.comcom.govt.nz at:

Standard Terms Determinations - Unbundled Local Loop Backhaul Service and

Standard Terms Determinations - Unbundled Bitstream Backhaul Service

Background

Unbundled bitstream access (UBA). The UBA service refers to the wholesale broadband service provided by Telecom from the end-user to the first data switch (FDS), or equivalent facility, other than a Digital Subscriber Line Access Multiplexer (DSLAM). It allows telecommunications companies to supply a range of broadband services to retail customers.

Basic UBA service. The Basic UBA service is an internet-grade 'best efforts' bitstream service, The Basic UBA service is available with or without plain old telephone service (POTS).

Enhanced UBA service. The Enhanced UBA Service allow for the simultaneous delivery of both internet grade IP traffic and real time grade IP traffic over a single UBA connection. There are three speeds of Enhanced UBA service (40 kbps, 90 kbps or 180 kbps), and each speed is available with or without POTS. Compared to the Basic UBA service, the Enhanced UBA service offers a dedicated real time service, at all points of time, for each end-user.

UBA Backhaul. The UBA Backhaul service provides transmission capacity in Telecom's network between the trunk side of Telecom's FDS that is connected to the end-user's building and the access seeker's nearest available point of interconnection (ASNAPOI).

Unbundled copper local loop network (UCLL). The UCLL service refers to the wholesale service provided by Telecom from the end-user's premises to Telecom's local exchange. It allows telecommunications companies to supply voice and broadband services to retail customers without the need to replicate the local loop.

UCLL Backhaul. The 'unbundled copper local loop network backhaul (telephone exchange to interconnect point) service' (UCLL Backhaul) provides transmission capacity in Telecom's network between the handover point in Telecom's local telephone exchange and the ASNAPOI, for the purpose of providing access to, and interconnection with, Telecom's UCLL.

Standard Terms Determination (STD) process under the Telecommunications Act 2001 (Act). On 22 December 2006, the Act was amended to incorporate a process for the Commission to make an STD on which a designated access or specified service must be supplied by Telecom to all access seekers requesting the service. An STD includes non-price terms proposed by Telecom, usually in consultation with access seekers, and price terms for access to the service set by the Commission.

It is intended that an STD should be comprehensive enough and contain sufficient detail so that there is no need for an access seeker and access provider to enter into a separate agreement for provision of the service within the specified timeframe.

Standard terms determinations for Telecom's UCLL service and UBA service were released in November and December 2007 respectively.

A STD for the UCLL co-location service was released in November 2007.

A brief overview of the key steps in a standard terms determination process is available on the Commission's website: www.comcom.govt.nz under Standard Terms Determination Process Overview.