The Commerce Commission today released a revised draft report on the unbundled copper local loop (UCLL) backhaul service and a draft report on the unbundled bitstream access (UBA) backhaul service. The Commission has been undertaking a review into whether Telecom New Zealand Limited faces competition for providing these backhaul services.

Backhaul is the final link connecting competitors to Telecom’s networks, so those competitors can provide communication services such as voice and broadband to households, without having to replicate Telecom’s network. Where the Commission finds that a link is competitive, it will not be subject to regulation. By contrast, where Telecom is found to face limited competition, a link will be regulated.

The Commission released a draft report for UCLL backhaul in August 2010. After considering the issues raised in submissions and other relevant information, the Commission has altered the assessment criteria which determine when alternative backhaul operators are considered to be a competitive constraint on Telecom.

“The Commission now considers that any alternative backhaul operator that is within 1-2 kilometres of a Telecom exchange will be considered a competitive constraint on Telecom unless the backhaul operator has publicly stated that it does not intend to connect to the exchange. This change to the criteria more appropriately reflects the extent to which Telecom is constrained in backhaul markets,” said Dr Ross Patterson, Telecommunications Commissioner.

Using the revised framework, the Commission has issued a revised draft review for the UCLL backhaul service which concludes that Telecom faces competition from other providers of backhaul services on 111 out of 207 links. For these links, the UCLL backhaul service is not available as regulated service” said Dr Patterson.

The Commission has also issued the first review for the UBA Backhaul service which applies the same criteria and concludes that Telecom faces competition from other providers of backhaul services on 37 out of 92 links. For these links, the regulated UBA backhaul service is not available as regulated service.

Interested parties have an opportunity to make submissions on both draft reports by 5pm on 7 October 2010.

After considering submissions, the Commission expects to release the final review reports and give public notice of the results of the reviews by late October 2010.
The draft reports can be accessed on the Commission’s website www.comcom.govt.nz/competition-reviews-for-uba-backhaul-and-ucll-backhaul-services

Background

Local loop. The unbundled copper local loop network service (local loop) refers to the service that enables access to, and interconnection with, Telecom’s copper local loop network. It allows telecommunications companies to supply voice and broadband services to retail customers without the need to replicate the local loop. 
Unbundled bitstream access (UBA) service allows other telecommunications companies to supply broadband services to retail customers without the need to replicate Telecom’s copper local loop.

UBA 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).
UCLL backhaul is the link connecting competitors to Telecom’s local loop, so those competitors can provide communication services such as voice and broadband to households. Backhaul is only regulated where Telecom faces limited competition.

The UBA backhaul service provides transmission capacity in Telecom’s network between the trunk side of Telecom’s first data switch that is connected to the end-user’s building and the access seeker’s nearest available point of interconnection.

In June 2008 the Commerce Commission released the unbundled copper local loop backhaul standard terms determination, which set out which backhaul routes were subject to regulation, as well as the terms and conditions governing the supply of the backhaul service on those routes.

The current reviews look at a number of UBA backhaul and UCLL backhaul routes and examines whether there is actual or potential competition to Telecom on those routes. Where the Commission finds that a route is competitive, it will not be subject to regulation. By contrast, routes where Telecom is found to face limited competition will be regulated. Regulation means that the terms and conditions of the Commission’s UBA backhaul or UCLL Backhaul decisions will apply upon the access seeker’s request. The details of which routes were looked at as part of the review are available in the draft review reports.
In this release the Commission refers to a backhaul link as being ‘competitive’ to describe situations where Telecom does not face limited, and is not likely to face lessened, competition in the relevant market. 

The Commission’s UBA backhaul or UCLL backhaul decisions and related documents can be found on its website at www.comcom.govt.nz/unbundled-copper-local-loop-backhaul-service/
Documents related to the reviews, including public copies of information provided by Telecom (Group) and Chorus are available on the Commission’s website at www.comcom.govt.nz/competition-reviews-for-uba-backhaul-and-ucll-backhaul-services/