The Commerce Commission has released two more studies related to the ongoing TSO (telecommunications service obligation) level setting process.
The documents, TSO Weighted Average Cost of Capital (WACC) and a report by an economic consultancy on the intangible benefits of the TSO, add to the commission's armoury of reports that suggest the TSO cost is different to what Telecom says it should be.
The commission believes the WACC, on which the TSO calculation is based, is lower that Telecom's estimate.
Telecom believes it is 11.2% plus a 2% increment for factors not captured by conventional cost of capital calculations, whereas the Commerce Commission believes the figure is 8.2%.
Interested parties can make submissions to the commission before June 13 and the commission's draft determination on TSO on June 27.
The TSO is the replacement to the Kiwi Share Obligation (KSO), under whose provisions Telecom was sold the local loop. Telecom had to provide free local calls, a certain level of price parity between rural and urban, and a couple of other things. This has morphed into the TSO and now applies to all telcos.