Local Loop Unbundling Charges

The Commerce Commission has set an average price of around $20 for local loop access.  Telecom have submitted that this is far too low and it should be around $30 a month.  I find this interesting as the price for unbundled bitstream access (which involves using more of Telecom’s assets) is lower than $30.

Telecom says LLU charges will provide 90% of the revenue for its new Access Network Division.  And that is about right.  So Telecom Wholesale will also pay the same charge.

Now I don’t have the exact stats on me, but I think there are around 2.2 million households in NZ, so let’s assume 2 million residential home lines.

The Commission’s $20 a month is $240 a year while Telecom’s assertion that the cost of maintenance will need $30 a month is $360 a year.

Option 1 is $480 million a year and option 2 $720 million a year. Now that is a significant amount of money just for spending on the core local loop and associated network.  It doesn’t include back haul which is a separate service.

Under the reforms Telecom will need to produce separate accounts for the network division.  It will be very interesting to see if they really are spending greater than half a billion a year on capital investment and maintenance into the local loop.

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