Commerce Commission finds backhaul competition continues to increase

The Commerce Commission today released the draft decision of its annual competition review of unbundled copper local loop (UCLL) and unbundled bitstream access (UBA) backhaul link services.

This was the fourth competition review of UCLL backhaul links and the second competition review of UBA backhaul links, conducted under section 30R of the Telecommunications Act.

In its draft decision the Commission has found an increase in the competitiveness for both local and regional backhaul links that were assessed by the Commission. 83% of UCLL and unbundled copper low frequency service (UCLF) and 76% of UBA local links are competitive. In addition, 95% of regional links are now subject to competition.

In 2008 only 37 local UCLL backhaul links were considered competitive. This figure is now 178. 36 out of 38 regional links are now competitive, compared to only 22 out of 38 in 2008.

The draft decision recognises the continuing investment in backhaul by access seekers and the consequences of the separation of Chorus and Telecom.

Backhaul services provide Chorus’ competitors with access to transmission capacity from local exchanges to points of interconnect, and then between regions, without having to replicate Chorus’ network. This allows competitors to provide communications services, such as voice and broadband to households.

The competition review determines whether Chorus (access provider for both backhaul services) faces limited, or is likely to face lessened, competition in the relevant markets for backhaul primary (local) and secondary (regional) links. Regulation will no longer apply on links where Chorus faces effective competition.

The Commission is seeking submissions on the draft decision by 5pm on Friday 27 July 2012. Cross-submissions are required by 5pm on Friday 10 August 2012. The Commission anticipates releasing its final decision in mid-September 2012.

You can find the draft decision on the Commission’s website at www.comcom.govt.nz/competition-review-of-uba-backhaul-and-ucll-backhaul-markets


Background

In June 2008, the Commission released the UCLL and UBA backhaul Standard Terms Determination (STD), 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.

As there are similarities between the UCLL and UBA backhaul services, the Commission indicated in March 2011 that a combined review process would be undertaken for both in the future.

The unbundled copper local loop (UCLL) refers to the service that enables access to, and interconnection with, Chorus’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.

Previous reviews of UCLL backhaul links were published on 30 April 2009 (Decision 667), 3 December 2009 (Decision 686), and 9 March 2011 (Decision 706) on the Commission’s website at www.comcom.govt.nz/unbundled-copper-local-loop-backhaul-service

The unbundled bitstream access (UBA) backhaul service allows other telecommunications companies to supply broadband services to customers without the need to replicate Chorus’s copper local loop network.

One previous review of UBA backhaul links was published on 23 March 2011 on the Commission’s website at www.comcom.govt.nz/unbundled-copper-local-loop-backhaul-service/

The unbundled copper low frequency service (UCLF) enables telecommunications companies to have access to the low frequency portion (the frequency band between 300 and 3400Hz) of the unbundled copper local loop (UCLL) network. When telecommunications companies have this service they can supply voice services to retail customers without needing to replicate the local loop.

Local or primary links are those between the local exchange and a point of interconnect.

Regional or secondary links are those between points of interconnect.