Chorus must maintain uncongested copper links: Regulator

The New Zealand Commerce Commission has announced that it will alter the non-price terms of telecommunications carrier Chorus' unbundled bitstream access (UBA) service in order to ensure the copper service fulfils the medium-term needs of consumers by preventing congestion.

The UBA allows other retail service providers to provide customers with fixed-line broadband services via Chorus' legacy copper lines, equipment, and software. Regulated UBA services are provided at a designated regulated price, while Chorus can charge different prices for its UBA commercial variants.

Under the regulator's decision, Chorus must now maintain uncongested links on the local aggregation path (LAP) between the DSLAM and the first data switch; and report monthly on the peak utilisation of all LAPs providing the UBA service.

The Commerce Commission also added a 10GigE handover connection service to the UBA standard terms determination, capping the price for multiple 1GigE handover connections at the 10GigE handover connection price.

Exempted from the requirement to maintain uncongested links are 19,000 lines in Chorus' ATM and other non-fibre LAPs, with the Commerce Commission to re-evaluate this once the government's Rural Broadband Initiative (RBI) phase 2 final decision is made; however, Chorus must still provide monthly reports on these lines.

The Commerce Commission said it altered the terms due to changes in the telecommunications industry over the last few years, including growing use of bandwidth; the migration of users to high-speed fibre services including the government's ultra-fast broadband (UFB) network; the unbundling of copper local loop by access seekers; the structural separation of Telecom into Spark and Chorus; Boost variants of services; and the UBA pricing decision made by the regulator in 2015.

"While migration to the new fibre network is progressing apace, UBA will remain a key input for retail broadband for some time yet, particularly in areas beyond the reach of the ultra-fast broadband initiative," Telecommunications Commissioner Stephen Gale said.

"We are confident that the new standard will not lead to inefficient investment, even if copper is deregulated in UFB areas as currently proposed by the Ministry of Business Innovation and Employment."

The commission added that the changes "will only trigger investment by Chorus where utilisation levels threaten the quality of the UBA service".

The regulator had decided in April last year to review the non-price terms for the UBA, examining whether the UBA standard terms determination was "fit for purpose" as described under Section 30R of the Telecommunications Act 2001.

This followed the commission releasing its UBA final pricing determination in December 2015, setting it NZ$50 million lower than that applied when Chorus separated itself from Telecom -- though NZ$120 million higher than the original pricing proposed by the Commerce Commission.

Chorus' recent doubling of its net profit from NZ$33 million to NZ$66 million was attributed to recovering from the impact of the UBA pricing decision.

As of December 31, Chorus had 1.21 million broadband connections: 784,000 copper UBA customers; 231,000 fibre; and 199,000 VDSL.

Chorus in January also announced that it would extend the UFB to 169 new areas and 203,000 premises across the country. Under UFB2, Chorus intends to pass 5,000 premises in FY18; 26,000 in FY19; 33,000 in FY20; 29,000 in FY21; 23,000 in FY22; 25,000 in FY23; 21,000 in FY24; and 6,000 in FY25.

Construction on the second stage of the UFB will begin in July.