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Topic # 69899 15-Oct-2010 08:54 Send private message


The Commerce Commission announced today it has launched an investigation into an alleged breach of Separation Undertakings by Telecom Corporation of New Zealand. The investigation will assess whether Telecom Wholesale is likely to have discriminated against telecommunications providers in favour of Telecom Retail.

The Commission’s concerns arise from the price at which Telecom Wholesale offered the unbundled bitstream access (UBA) service to telecommunications providers who intended to take up the sub-loop extension service (SLES) from Chorus, compared with the price Telecom Wholesale charged to Telecom Retail.

The sub-loop extension service (SLES) is a commercial service provided by Chorus to enable service provider to supply an exchange-based voice service in conjunction with a cabinet-based UBA broadband service.

“Earlier this year concerns were raised with the Commission about the price Telecom requested for the UBA service to be supplied in conjunction with SLES,” said Dr Ross Patterson, Telecommunications Commissioner. “At the time the Commission advised Telecom of its concerns that Telecom Wholesale’s offer was discriminatory. Telecom responded that it did not believe that Telecom Wholesale was in any way in breach of its non-discrimination obligations.”

The investigation follows the completion on 14 October 2010 of a clarification process into the provision of UBA in conjunction with SLES. 

The Commission will now gather information to assist its investigation. Interested parties will be able to make submissions during the investigation. The Commission expects to complete the investigation by the end of March 2011 and will not be making any further comment at this stage of the investigation.

Background
The clarification relating to the provision of unbundled bitstream access (UBA) service in conjunction with sub-loop extension service is available on the Commission’s website www.comcom.govt.nz/uba-with-sub-loop-extension-service/ 

Unbundled bitstream access (UBA) service refers to the service that enables access to, and interconnection with, that part of Telecom’s fixed public data network that connects to the end-user’s building to Telecom’s first data switch (or equivalent facility) other than a digital subscriber line access multiplexer.(DSLAM). The UBA service allows telecommunications companies to supply broadband services to retail customers without the need to replicate Telecom’s copper local loop. 

Under the UBA service Telecom Wholesale may charge an ‘uplift’ where a telecommunications provider is not separately paying the cost the local loop such as purchasing plain old telephone service (POTS). The clarification decision clarifies that the uplift may not be charged wheretelecommunications provider separately purchases the sub-loop extension service (and the local sub-loop) from Chorus.

The price and non-price terms on which Telecom must make the unbundled bitstream access (UBA) service available to other telecommunications providers were set in a standard terms determination made in December 2007.

The Commission’s UBA Standard Terms Determination, including executive summary, can be found at www.comcom.govt.nz/unbundled-bitstream-standard-access-service/

Telecom (Wholesale) is the Telecom business unit that supplies the UBA service.

Separation Undertakings
In December 2006 the Telecommunications Act 2001 was amended. A key component of the amendments to the Act was Part 2A, which set out the requirement for the operational separation of Telecom Corporation of New Zealand Limited (Telecom). 

The Act states that the purpose of operational separation is to:
- promote competition in telecommunications markets for the long-term benefit of end-users of telecommunications services in New Zealand;
- require transparency, non-discrimination, and equivalence of supply in relation to certain telecommunications services; and
- facilitate efficient investment in telecommunications infrastructure and services.

Part 2A was implemented by the Telecom Separation Undertakings, provided by Telecom to the Minister of Communications on 25 March 2008 in accordance with section 69K(2)(c) of the Telecommunications Act 2001.

Non-discrimination obligations were imposed on Chorus through clause 31 of the Undertakings and on Telecom Wholesale through clause 56.

The Commerce Commission is responsible for enforcing the Undertakings. The Commission is investigating whether to take enforcement action under Part 2A of the Telecommunications Act.

Penalties. While the Commerce Commission can take enforcement action, it is up to the courts to impose penalties. It is important to note that the penalties set out below are the maximum. It would be up to the courts to set appropriate penalties.

If the Commission finds that Telecom has failed to comply with the Separation Undertakings, the Commission may request that the High Court impose penalties of up to $10 million for the breach, plus $500,000 per day for breaches continuing after the decision by the High Court. In addition, the High Court may order Telecom to pay damages to injured parties and may issue orders requiring Telecom to undertake other remedies, including injunctions restraining Telecom from behaviour that breaches the undertakings.






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  Reply # 392207 15-Oct-2010 13:16 Send private message

TL;DR ;)

Seriously, cant the commerce commission just butt out of dealing with internet issues, they are too slow to be effective and their dimensioning of the regulated services CIR clearly shows they have no clue about what is needed for.

It will take them 6 months to complete their investigation, then probably another 6 months while they get appeals and stuff, while services are still dire and slow.




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  Reply # 392217 15-Oct-2010 13:32

richms: TL;DR ;)

Seriously, cant the commerce commission just butt out of dealing with internet issues, they are too slow to be effective and their dimensioning of the regulated services CIR clearly shows they have no clue about what is needed for.


It will take them 6 months to complete their investigation, then probably another 6 months while they get appeals and stuff, while services are still dire and slow.


 

Often it can take years and years. The commerce commission should be doing their job with the finance companies who have cost mum and dad investors billions, wiping billions from NZs wealth. Instead they are obsessed with  telecom and the telco industry, where there is now reasonable cut throat competition.

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  Reply # 392220 15-Oct-2010 13:35 Send private message

anyone care to translate the press release into plain english?

What exactly are Telecom supposed to have done?

charged less to retail for cabinitised lines than to their wholesale customers? something like that?

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  Reply # 392240 15-Oct-2010 14:03

The Commission is looking into whether Telecom has been charging its wholesale partners more than its retail arm for access to the network to sell voice and broadband.

From the first paragraph:

The investigation will assess whether Telecom Wholesale is likely to have discriminated against telecommunications providers in favour of Telecom Retail.


Paul

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  Reply # 392242 15-Oct-2010 14:05 Send private message

From orcons answer here http://www.techday.co.nz/telecommunicationsreview/news/orcon-comcom-decision-means-better-deals-for/.../ it seems they dont understand the announcement either, and are under the impression that something has been decided already.




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  Reply # 392252 15-Oct-2010 14:17 Send private message

richms: From orcons answer here http://www.techday.co.nz/telecommunicationsreview/news/orcon-comcom-decision-means-better-deals-for/.../ it seems they dont understand the announcement either, and are under the impression that something has been decided already.



A decision came out yesterday.  Todays announcement is merely to assess whether Telecom breached its obligations and whether it should be fined in doing so.

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  Reply # 392253 15-Oct-2010 14:18

Something did.

Yesterday the Commission released its clarification of the sub-loop process, which says the price Telecom can charge for SLES and SLU (yes, really) is UBA with POTS price and that Telecom can't charge again for the copper line rental.

Today the Commission has announce it is investigating whether Telecom is complying with separation undertakings:

"The investigation will assess whether Telecom Wholesale is likely to have discriminated against telecommunications providers in favour of Telecom Retail."

So, yesterday's announcement says what price Telecom must offer, today's announcement says the CC will look at whether not charging that price for the past couple of years was a breach of its separation undertakings.

"The Commission’s concerns arise from the price at which Telecom Wholesale offered the unbundled bitstream access (UBA) service to telecommunications providers who intended to take up the sub-loop extension service (SLES) from Chorus, compared with the price Telecom Wholesale charged to Telecom Retail."

SLES and SLU form the two halves of the connection from the exchange to the cabinet and from the cabinet to the customer property.

Cheers

Paul






Paul Brislen
Head of Corporate Communications
Vodafone

http://forum.vodafone.co.nz


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  Reply # 392254 15-Oct-2010 14:19

Heh. What he said, but much longer.

;-)




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http://forum.vodafone.co.nz


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  Reply # 392263 15-Oct-2010 14:36 Send private message

But yours was more succinct. 

@richms:  Why do you think Orcon is confused?  If the telcos have been wearing higher costs in supplying services and essentially having to hold prices higher to stay in business then this may mean that:
- either prices come down to a "normal" level
- customers that couldnt be economicially served off a cabinet might now be offered services.

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  Reply # 392269 15-Oct-2010 14:50 Send private message

PaulBrislen: So, yesterday's announcement says what price Telecom must offer, today's announcement says the CC will look at whether not charging that price for the past couple of years was a breach of its separation undertakings.


Surely only from the point Telecom Retail started using "clothed UBA" services with their own internal POTS service? So 10 months?


SLES and SLU form the two halves of the connection from the exchange to the cabinet and from the cabinet to the customer property.


I guess the confusing part is that SLES isn't a regulated product in the same way that SLU is... oh well, more money for lawyers!


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  Reply # 392270 15-Oct-2010 14:52

Could be... could be... I'm just pleased I know how to spell SLES and SLU!

Paul




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  Reply # 392275 15-Oct-2010 15:05 Send private message

Telecom acting anticompetitive. Why doesn't that seem strange.
I guess Telecom still doesn't play well with others, when will they learn.

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  Reply # 392287 15-Oct-2010 15:24 Send private message

Telecom have a massive investment in a network, they deserve a return on that. Now that future returns are in jeopardy thanks to socialized FTTH rollouts, its even more criminal that the CC are telling telecom how to price their services IMO.




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  Reply # 392291 15-Oct-2010 15:30 Send private message

ComCom have been setting prices for many many years - as an organisation it is pretty thorough on cost-benefit, the degree of competition.

Some decisions have been "ropey" IMHO in terms of determining price via benchmarking but that is one of the tools for draft price determinations.  And one has to weigh up whether the TSLRIC price would be significantly different (up or down) relative to a benchmark detemined price.

Most telcos in the world have regulators setting prices where bottleneck assets exist.  We've got a relatively good regulator that tries to be as transparent as possible.

You could, of course, take years of cost-benefit analysis that determines something and have a Ministry throw it out completely and replace it with a levy (read TAX).  TSO anyone?

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  Reply # 392301 15-Oct-2010 16:00

@richms, nobody's denying Telecom the right to make a return on its investment. What Telecom can't do is discriminate between its retail partners and so the CC is investigating to see whether that's gone on.

Telecom undertook to deliver the same price to ISPs that it charges Telecom Retail so as to avoid being broken up. If it's not living up to that expectation then it could face further regulatory involvement.

I don't think it'll go that far - the measures in place include quite nasty fines and that's probably enough - but it's very important that the Wholesale team be allowed to serve all of their customers (the ISPs) at the same rate that Telecom Retail is served.

That's a personal remark, by the way, as someone who watched throughout the whole process, not a VF comment.

Cheers

Paul

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