Commerce Commission responds to Orcon open letter

Commission clarifies thinking on the sub-loop

The Commerce Commission has responded to ISP Orcon's concerns about its determination on sub-loop pricing, effectively smacking down the objections and reaffirming its position.

It says in aletter that the commission's decision on pricing for sub-loop services results from the service description under the standard terms determination. Bandwidth is not a cost driver in this case as it is with local loop backhaul, it says.

The determination sets pricing for access to Telecom's roadside cabinets for competing ISPs seeking to deliver services directly to customers rather than resell Telecom's wholesale services. Such access is required for challenger telcos to unbundle the sub-loop, the copper wires used to deliver ADSL broadband services.

Orcon last week issued an open letter to the commission arguing its pricing determination, 26% higher than for the local loop, made sub-loop unbundling uneconomic.

The commission says its proposed approach to the sub loop was a fibre service lit by Telecom's equipment at each end of the fibre link. Its preliminary view was that this service met the requirements of the Telecommunications Act.

However, at the Sub-loop Services Conference, access seekers advised this was not practical because of the need for Telecom's equipment to interface with that of access seekers.

Without Telecom equipment at the end of each fibre link the service does not meet the requirements of the Act, the letter says.

The commission's decision reflects the costs of providing the dedicated fibre service over short distances with Telecom equipment at the exchange end of the service only, it says.

"Given the extensive consultation the commission has undertaken in respect of the sub-loop services STD, the commission considers that prices set by the STD reflect the underlying costs of providing the service described in the STD," the letter concludes.

Duncan Blair, Orcon's head of brand and communications, says Orcon is "disappointed that we seem to be the only ones that are standing up for the interests of consumers, and hoping to ensure that we continue to see competition in the broadband market".

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