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Chorus stokes competition in copper line backhaul services

Friday 5th October 2012

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Telecom's spin-off of network operator Chorus into a separately-listed entity last year has stoked competition in backhaul services on the country's main copper-lines infrastructure and dimmed the need for regulatory oversight, according to the Commerce Commission.

The regulator has just conducted its fourth competition review of backhaul services for the unbundled local loop (UCLL), unbundled copper low frequency (UCLF) and unbundled bitstream access (UBA), which lets telecommunications companies assess transmission capacity from those exchanges to offer services such as voice and broadband connection.

The commission will continue to keep tabs on 44 of the 215 UCLL/UCLF primary links between a local exchange and a main exchange where a telecommunications company can interconnect, and two of 38 regional links between those main exchanges, it said in a statement. It had previously required regulation of 127 primary links of 168 reviewed and four secondary links.

"The increase in competition is mostly due to the separation of Telecom in November last year," Telecommunications Commissioner Stephen Gale said. "At that time, Chorus and Telecom split the spare fibres on backhaul links so there was an immediate jump in competition for those links."

The government previously imposed regulation on Telecom's ageing copper network as part of an enforced operational separation of the Chorus unit amid fears the phone company wasn't selling access to those lines on equal terms, which subsequently extended into monitoring competition on the backhaul network.

That has become less of an issue since Telecom demerged with Chorus last year to free itself from that regulatory burden and let the network company successfully pitch for the government's subsidy to build a national fibre infrastructure.

Gale said the regulator has also seen more backhaul investment by other telecommunications companies.

Of the links assessed, the commission found an appropriate level of competition on 80 percent of UCLL/UCLF backhaul primary links, 68 percent of UBA backhaul primary links, and 95 percent of UCLL/UCLF and UBA backhaul secondary links.

Shares in Chorus rose 0.3 percent to $3.32 in trading today, while Telecom's stock gained 0.4 percent to $2.40.

BusinessDesk.co.nz

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