Commission consults on approach to copper cost modelling

The Commerce Commission has today released a consultation paper seeking views on a number of decisions in relation to the cost models it will build to price the unbundled bitstream access (UBA) service and the unbundled copper local loop (UCLL) service.

The paper sets out the Commission’s view on the regulatory framework, the type of hypothetical replacement network it will be modelling for the UCLL and UBA services and how the Commission will address a number of key modelling decisions.

The Commission’s preliminary view is that for the UCLL service, it will model a fibre-to-the-home network, with fixed wireless in remote areas; and for the UBA service it will model costs using Chorus’ copper-based inputs. In both models, the Commission proposes taking advantage of third party assets where possible.

They also propose a five year regulatory period and indicates that it will make a decision whether or not to backdate the prices it determines when releasing its draft decisions in December this year.

Since receipt of the UBA and UCLL final pricing principle (FPP) applications, the Commission has been developing the regulatory framework and the key issues and process options for building a Total Service Long Run Incremental Cost (TSLRIC) cost model for the UCLL and UBA services.

The Commission has been aided in preparing its consultation paper with feedback gained from submitters over several consultation rounds, and during several workshops attended by Chorus, Telecom, Vodafone, CallPlus and Internet NZ.

The Commission has also engaged expert cost modellers TERA Consultants based in France, and expert economic advisor Professor Ingo Vogelsang.

Telecommunications Commissioner Dr Stephen Gale welcomes feedback from interested parties prior to commencing the modelling processes.

“We have been working closely with our external advisors to formulate a set of proposals on building cost models for the telecommunication services we are pricing," he says.

"We now welcome input on our proposed approach and a number of key modelling decisions prior to assisting us with modelling the UCLL and UBA services. ”

To access the consultation paper, visit: http://www.comcom.govt.nz/unbundled-copper-local-loop-and-unbundled-bitstream-access-services-final-pricing-principle/