Copper line pricing exercise continues despite wider policy review

ComCom continues with its determination on unbundled bitstream access service

The Commerce Commission is pressing on with its determination of a cost-based price for wholesale broadband – the unbundled bitstream access (UBA) service.

This is despite government’s announcement earlier this year that it will defer the date on which the new UBA price will come into effect to 2015, and that it will meanwhile conduct a wide-ranging statutory review of the whole policy framework for telecommunications regulation.

Chorus objected to the swingeing 58 percent proposed cuts to UBA pricing in the commission’s draft decision, saying such a price would reduce its earnings by as much as $160 million.

In its submission on the draft decision, Chorus said it “starkly highlights the incoherent policy environment”. ICT Minister Amy Adams subsequently announced the major policy review.

Telecommunications Commissioner Stephen Gale has now announced that the commission will hold a conference on June 12 and 13 to test the views expressed by industry in submissions and cross-submissions on the draft UBA determination. The commission expects to finalise the UBA determination in August 2013.

Amendments to the legislation in 2011 introduced a cost-based price for UBA from December 2014. Under this legislation, the commission is required to make ‘reasonable efforts’ to complete the UBA price determination – using international benchmarks – by December 2012, and to allow sufficient time to derive the UBA price from a cost model by December 2014, if requested by industry.

“Despite the proposed deferral of these 2014 deadlines, we have concluded that the grounds for delay are insufficient to outweigh the ‘reasonable efforts’ imperative in the Act,” Gale says. “It is possible that a cost model will be required for the UBA price, and that this task will be combined with the cost modelling that is now underway for the underlying copper local loop. The timeframe for such a combined review would be likely to extend into 2015 and may be more compatible with allowing for changes arising from the review of the Telecommunications Act.”

InternetNZ (Internet New Zealand Inc) has welcomed the commission’s decision to continue its review.

“The price that the commission determines at the end of this process will be an important benchmark for the government’s forthcoming review of the policy framework for telecommunications regulation,” says spokesperson Susan Chalmers.

The law leaves the commission with a clear duty to complete the pricing review, InternetNZ says in a statement. The industry and the markets need to know what the final price would be under the law, it says “Completing this price review will improve consumer and investor certainty.”

Responses to the commission’s consultation on the timeframe for completing the UBA price review can be read here.

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