Telecommunications Leased Line Service Performance
47. Leased lines, i.e. point-to-point data links with a specified data speed or committed bit rate, are available from a number of providers. However, in many locations links provided by alternative suppliers will also comprise, at least partly, a data link supplied by Telecom.
48. Point-to-point committed bit rate (CBR) data transmission links are declining in importance with the development of IP packet switch networks that can cost effectively control the IP packet transmission quality of service. For example, Telecom's Private Office17 service can provide a CBR level of performance using an IP based network.18
49. Comparing data link prices across the OECD is not straightforward because the OECD standard baskets assume specific technologies some of which are now obsolete. The comparison was limited to two specific data link service speeds, 64 kbps and 2 Mbps. The OECD standard data basket also includes a lower speed data service (<64 kbps) that is no longer available in New Zealand and this service was not included in the benchmarking. Where necessary an equivalent New Zealand data service based on current technology was used in the OECD basket comparison.19
50. In general, low speed CBR data links are used by a business, such as a bank processing centre, a head office or a supply warehouse, located in a main centre, to link up with branch offices. Typically, such branch offices are located in suburban or urban areas, or in smaller towns, throughout New Zealand.
51. The following chart benchmarks the price of a basket of 64 kbpsCBR point-to-point data links using a standard OECD data service basket methodology.
OECD Country 64 kbps Point-to-Point Leased Data Services (February 2005)
→ Larger version of "OECD Country 64 kbps Point-to-Point Leased Data Services (February 2005)" [29 KB GIF file]
52. New Zealand's relative pricing performance was ~39% above the OECD average for lines with 64 kbps capability, ranking performance in the bottom quartile of the OECD.
53. Typically, higher speed committed data rate links, such as a 2 Mbps committed bit rate data link, are used by larger businesses, to link the organisation's network together between major locations or link with other networks such as an ISP or the telephone network.
54. The following chart compares 2 Mbps point-to-point data link pricing across OECD countries using a standard OECD basket.
OECD Country 2 Mbps Point-to-Point Leased Data Services (February 2005)
→ Larger version of "OECD Country 2 Mbps Point-to-Point Leased Data Services (February 2005)" [28 KB GIF file]
55. New Zealand relative pricing performance for 2 Mbps committed bit rate data links was about 40% below the OECD average ranking performance in the OECD top quartile. The result suggests that there is keen competition in the market for supply of this type of service.
Background Information
56. In general, the majority of 2 Mbps services are provided in larger centres where alternative infrastructure is likely to be available. Further, larger businesses typically have considerable bargaining power and a potential supplier will also consider building out an access link where alternative access infrastructure is not available. The 2 Mbps benchmark results are consistent with these points.
57. The Commerce Commission's 2003 investigation into local loop unbundling led to Telecom making available an unbundled partial private circuit (UPC) service at cost-based pricing. The service has an nx64 kbps committed bit rate speed, where n can range from 1 to 29 such that the data link can be used to support bit rates up to nearly 2 Mbps.
58. The UPC is a "data tail", or end of a data circuit, that enables other service suppliers to provider point-to-point data services with speeds less than 2 Mbps to customers beyond the reach of their own networks. The service was introduced on 8 October 2004 and it is understood that Telecom has undertaken to make the service available for at least two years.
59. The availability of Telecom's UPC service will promote competition in the 64 kbps data service market, and provide other suppliers with a service that they will be able to use to extend the reach of their IP based data service offerings.
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