TERA’s report for the Commerce Commission of New Zealand: benchmark of the UCLL prices
Unbundled Copper Local Loop (UCLL) and Unbundled Bitstream Access (UBA) are services that allow alternative operators’ access to the local loop infrastructure of the historical operator.
Those prices are determined by the Commerce Commission of New Zealand, with the assistance of TERA Consultants TSLRIC cost models.
Some interested parties argued that the draft price of UCLL and UBA was far above the existing equivalent prices in other jurisdictions, particularly in Europe. Indeed, the draft UCLL price set in December 2014 equals NZD 28 while European UCLL prices generally fall within the €8 - €10 price band, i.e. NZD 13 – NZD 17.
TERA Consultants has therefore been mandated by the Commerce Commission to compare the UCLL and UBA prices and costs and understand key differences between New Zealand and some European countries and identify the key drivers of the UCLL price:
- The length of the access network per user
- The national scope of the network (the share of costliest lines removed for calculation)
- The metric costs of infrastructures
- The financial and economic assumptions (inflation, cost of capital)
Those metrics appear far greater in New Zealand than in other selected countries, resulting in a greater price per user.
Along with the ‘benchmark’ report drafter by TERA Consultants, the Commerce Commission has released infographic material illustrating the breakdown of costs in New Zealand and the comparison of the key drivers of the UCLL price.