Commission sets discount rate for Telecom wholesaling

The Commerce Commission today ordered Telecom to offer wholesale services to rival TelstraClear at a 16 per cent discount to its standard prices.

Telecommunications regulator Douglas Webb said New Zealanders, particularly those in the regions, would have a greater choice in purchasing telecommunication services as a result of today's final determination.

The 16 per cent was near the mid-point of the 14.8 per cent to 18.05 per cent set in the regulator's draft determination in November.

The determination covers business line rental and local calling, fixed-to-mobile services, directory assistance, voice messaging, business and residential broadband access and data services outside the major centres.

"What this determination means for small businesses and customers is that they now have the choice of having either Telecom or TelstraClear as their supplier of many telecommunication services, even in areas beyond the reach of the TelstraClear access network," Mr Webb said.

Today's determination largely relates to the wholesaling of business services and residential broadband.

TelstraClear has made a separate application in respect of residential local access and calling services, which is currently being investigated by the Commission.

A draft determination on this second application will be released shortly, Mr Webb said.

The Commission considered the state of competition in 18 product markets, identifying the individual services TelstraClear will be able to resell in nine markets where competition was currently limited.

A number of markets were found to be effectively competitive and the Commission declined to order resale in these markets.

The Commission's determination is effective for 18 months from today.

The markets the commission assessed the determination to apply to include: local access services for small to medium enterprises (SME); fixed-to-mobile services for SME and for corporate national calls; data services to non-metro businesses; broadband services to non-metropolitan residential customers; and directory assistance to businesses.

The markets assessed as having sufficient competition included: toll-free services to business for national and international calls; data services to metropolitan businesses and business international calls; broadband for metropolitan businesses; premium rate services to business for national calls; and operator services.

TelstraClear's application originally described 308 services for which it sought a determination. That was narrowed down to 158 and after definition of markets and analysis, the commission determined 98 services passed both the jurisdictional and competition thresholds and must be made available to TelstraClear for resale.

Telecom will be required to maintain a comprehensive list of designated services and calculate the standard retail prices by service and market on a quarterly basis.

The commission based the 16 percent discount on a comparison with services in 47 US states. It said it selected a discount rate from within the lower half of the benchmarked range.

"A relatively high discount may increase the risk that investment in infrastructure will be deterred, while inefficient investment in resale functions may be encouraged."

Despite the determination, which was seen in November by telco experts as somewhat adverse to Telecom, the company's shares were up seven cents to $4.85 at 9.45am - their highest level since November.

- NZPA