Telecom backhaul services face regulation

Friday 1st May 2009

Telecom faces regulation over its backhaul services, after a Commerce Commission review found several routes to be uncompetitive.

Four backhaul routes, the links that allow the phone company’s competitors to provide landline and broadband services, previously considered to be open to competition will be subject to the terms set by the national regulator in its 2008 determination. Three other routes the Commerce Commission thought would require regulation were found to be competitive.

“The review’s conclusions reflect changes in the competitive backhaul market and take into account the unbundling of additional local exchanges by Telecom’s competitors,” the regulator said in a statement. “The Commission concludes that 13 of the 41 new routes are competitive.”

The report concluded competitive constraints on “near entrants should be considered on a local exchange by local exchange basis”, and has given Chorus, Telecom’s network access division, two weeks to implement the changes. The regulator will undertake similar reviews on a three-to-six monthly basis, with the next one set to begin in July.

The phone company recently pitched its Chorus division to partner with the government’s roll-out of ultra-fast broadband in a bid to take advantage of its existing infrastructure. In its submission, Telecom raised concerns over the unnecessary costs it may incur due to the operational separation it has undertaken.

The company’s stock rose 0.4% to $2.83 in trading on the NZX 50 index today.

Businesswire.co.nz

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