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antoniosk

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#133849 5-Nov-2013 08:57
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Announced this morning:

Media Release Issued 5 November 2013 Release No. 36  

Commerce Commission releases final decision on UBA price review The Commerce Commission has today released its final decision on the additional costs of Chorus’ unbundled bitstream access (UBA) service.

These are the costs of providing the UBA service over and above the unbundled copper local loop (UCLL) price component.

The additional UBA cost component will be $10.92 per line per month, applying—under current legislation—from 1 December 2014. The UCLL price component was reset on 3 December 2012 as $23.52 per line per month.

Combined, this results in a total UBA price of $34.44 per line per month. 

On 3 December 2012, the Commission released its draft decision on the UBA component as $8.93 per line per month, the average of the estimates at that time of prices in Denmark and Sweden. Following submissions and an industry conference, the Commission has corrected these benchmarks, removing one network element and allowing for the range of service speeds. The two benchmark prices are now $8.88 and $10.92 respectively.   

“In choosing a price from the benchmark set the Act directs us to promote competition, taking into account incentives to invest in new services, such as UFB” said Telecommunications Commissioner, Stephen Gale. “We have sought to ensure that we don’t under-estimate the UBA price, which might hamper investment and disadvantage end-users over the long-term. These considerations, along with country comparability have led us to the decision to adopt the higher Swedish price.”

“Our view is that the result is a robust measure of the required forward-looking costs of the UBA service”, said Dr Gale. “This view is supported by an analysis of a larger benchmark set that results in the same price of $10.92. The larger benchmark set includes three additional countries (Belgium, Switzerland and Greece) that have somewhat different network configurations. Sweden is the second highest in the five-country set.”

As part of its decision, the Commission also determined the price for Enhanced UBA variants (which provide a guaranteed class of service), connection and installation charges. If not satisfied with the benchmarked costs, industry parties can require that the Commission calculates the costs itself. The UCLL price is currently the subject of such a requirement.

The Commission’s full report is available at http://www.comcom.govt.nz/uba-benchmarking-review/




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freitasm
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  #927430 5-Nov-2013 09:29
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Response by Minister amy Adams:


Communications and Information Technology Minister Amy Adams has today received the Commerce Commission’s final Unbundled Bitstream Access price.

The Commerce Commission today announced a final Unbundled Bitstream Access (UBA) price of $10.92, an increase from the draft price of $8.93.

When added to the current UCLL price, this gives a combined wholesale copper price of $34.44. This compares to the current price of $44.98 and the entry level fibre price of $37.50 to $42.50.

“Now that the final UBA price is known, the Government will consider its options in detail before making any further decisions,” Ms Adams says.






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  #927431 5-Nov-2013 09:30
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Comment by Slinshot's Mark Callander:


A Commerce Commission decision about the price ISPs pay Chorus for using its network has been welcomed by CallPlus and Slingshot CEO Mark Callander – and he is now calling for the government to step back from the “Copper Tax”.

“As far as CallPlus and Slingshot is concerned the Commerce Commission has done its job and now the Government should not intervene any further. Kiwis will benefit from these savings, Slingshot has already made a commitment that it will pass through savings to consumers,” says Mr Callander.

The Commission’s determination on the price Chorus charge retailers such as Slingshot on its copper phone line network will be $34.44 – a figure made up of two price components of $23.52 for Unbundled Copper Local Loop (UCLL) and $10.92 for Unbundled Bitstream Access (UBA)

The UBA price of $10.92 is higher than the Commission’s initial draft price of $8.93 proposed in December last year.
While Mr Callander is pleased with the new UBA price he is very concerned that this still won't satisfy Communications Minister Amy Adams, and that she will push ahead with a levy on copper broadband pricing.

The final figure of $34.44 is still $3.06 below the low end of Adams target of between $37.50 and $42.50.

The controversial proposed levy, which has been widely criticised by ISP’s including Slingshot, Orcon and Vodafone because of the impact it would have on consumers, has been viewed as a “tax” on broadband customers with an estimated $979 million cash windfall for Chorus, based on the initial price.

The levy has also been touted by the government as a way of supporting Chorus’ expensive rollout of the fibre network.

Mr Callander says CallPlus and Slingshot are strong supporters of UFB and the fibre network but research shows the copper-based system will be the key delivery method of broadband through to 2020 and beyond.

“Even the more optimistic commentators forecast that at the end of 2019 the majority of kiwis will still be on copper not fibre,” he says.

Mr Callander says the notion of Chorus going broke if the levy is not put in place to safeguard the company during the expensive fibre roll out is unfounded.

“The ‘Axe the Tax’ campaign, of which CallPlus and Slingshot are supporters, has shown claims that Chorus will be insolvent are not supported by any evidence. Chorus is a very profitable company that paid $95 million in dividends to its shareholders last year. The company will remain profitable with or without the copper tax.”

“The government have said it wants to remove uncertainty so now it’s time to move on. We hope that the minister will not intervene and will undertake a review of the Telecommunications Act in 2016 in line with the current timeframe when the real issues with respect to the UFB rollout should be clearer.”






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  #927442 5-Nov-2013 09:47
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Good.


The best part about this is both parties deserve it.


Chorus - got what was deserved.
End customers - pay a more realistic fee.


Done.




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sidefx
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  #927444 5-Nov-2013 09:50
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This sounds fairly reasonable to my relatively uninformed self. I'll be pretty disappointed if the government does step in now...




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Bee

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  #927446 5-Nov-2013 09:54
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So from what I read here there is a reduction of $10 per month ... will be interested to see if that gets passed on to the end consumer or just gets absorbed by ISPs...

Bring on the excuses of - "we already charge at that price which is below cost currently"...

NonprayingMantis
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  #927473 5-Nov-2013 10:27
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Bee: So from what I read here there is a reduction of $10 per month ... will be interested to see if that gets passed on to the end consumer or just gets absorbed by ISPs...

Bring on the excuses of - "we already charge at that price which is below cost currently"...


Well some of them do. E.g. Flip.


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  #927478 5-Nov-2013 10:37
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2d pulled the same stunt with MTR, If what Chorus is saying is true (Not an accountant) then congrats on getting cheaper copper at the expense of FTTH but I fully expect Chorus to be fudging the numbers




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MikeB4
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  #927489 5-Nov-2013 10:50
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There will be no changes to pricing.

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  #927504 5-Nov-2013 11:14
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sidefx
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  #927510 5-Nov-2013 11:22
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That Chorus press release reeks of FUD.




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NonprayingMantis
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  #927544 5-Nov-2013 12:18
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prob won't be any outward and obvious price drops.

more likely you will see ISPs add more value in e.g. instead of 30GB for $75, they might have 80GB for $75 and go up from there.

old3eyes
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  #927564 5-Nov-2013 12:33
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sidefx: That Chorus press release reeks of FUD.


I bet Chorus had that press release  prepared well ahead of time.  Just had to punch in the numbers..




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  #927572 5-Nov-2013 12:40
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NonprayingMantis: prob won't be any outward and obvious price drops.

more likely you will see ISPs add more value in e.g. instead of 30GB for $75, they might have 80GB for $75 and go up from there.


I would agree with you here on this one.... The demand of content in NZ overall is rising at a rapid rate yet the cost is dropping this means that somewhere someone is getting less money..... Now ISP's have the change to offer more to the end user, Personally I think the price is right but now ISP's have the chance to offer more to the end user.

Just to give you an Idea my other half uses up to 10gb per day of YouTube traffic, I have had to start caching my YouTube videos locally just to help save on a bit of bandwidth.




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  #927575 5-Nov-2013 12:43
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Nebbie:
NonprayingMantis: prob won't be any outward and obvious price drops.

more likely you will see ISPs add more value in e.g. instead of 30GB for $75, they might have 80GB for $75 and go up from there.


I would agree with you here on this one.... The demand of content in NZ overall is rising at a rapid rate yet the cost is dropping this means that somewhere someone is getting less money..... Now ISP's have the change to offer more to the end user, Personally I think the price is right but now ISP's have the chance to offer more to the end user.

Just to give you an Idea my other half uses up to 10gb per day of YouTube traffic, I have had to start caching my YouTube videos locally just to help save on a bit of bandwidth.


Holy smoke, doesn't she have a job or something to go to? That seems like a LOT of data for youtube a day!

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  #927588 5-Nov-2013 13:01
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networkn:
Holy smoke, doesn't she have a job or something to go to? That seems like a LOT of data for youtube a day!


LOL yes but when the Content on NZ TV is very poor there's more exciting and better content available on YouTube.
I personally use Netflix and Youtube may be other "tubes" but I have a friend in the US who gave me his password to use Netflix..... I spend hours sometimes.... that uses around 1.2mbit of bandwidth.




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