Telecommunications Leased Line Service Performance
58. Leased lines, i.e. point-to-point data links with a specified data speed or committed bit rate (CBR), 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.
59. 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.
60. 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.
61. The results for New Zealand of the OECD leased line baskets are summarised in the following table.
OECD Leased Line Data Service Baskets May 2006
| |
% of OECD Average |
OECD ranking |
| 64 kbps |
137% |
22 out of 25 |
| 2 Mbps |
60.8% |
6th out of 25 |
| Combined 64 kbps and 2 Mbps |
72.6% |
11th out of 25 |
62. The following chart reports the combined price of a basket of 64 kbps CBR point-to-point data links and 2 Mbps links using the standard OECD data service basket methodology. New Zealand's relative performance ranking was the same as the 2005 benchmark ranking.
OECD Country - Price of Leased Line Data Services (Excluding Tax)
Larger version of "OECD Country - Price of Leased Line Data Services (Excluding Tax)" [23 kB PDF]
Comment
63. Point-to-point data transmission links are continuing to decline in importance with the development of cost effective IP packet switch networks that can provide the required IP data transmission quality of service.
64. In the absence of an internationally recognised approach the Ministry intends to develop a satisfactory methodology for benchmarking the equivalent IP based point-to-multipoint data connectivity services, in conjunction with key stakeholders, and discontinue the use of this leased line data service benchmark.
Background Information
65. 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.
66. 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.
67. 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. 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.
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