Telecommunications Act: Commerce Commission Releases Draft Telecom TSO Cost Calculation For 2007/08

(LAWFUEL) – The Commerce Commission today released a telecommunication service obligation (TSO) Cost Calculation Determination for the Local Residential Telephone Service covering the 2007/08 year. The draft cost is $70.7 million.

Under the TSO Telecom is obliged to provide certain local residential telephone services to residential customers who may not otherwise be provided with those services at an affordable price. The TSO allows Telecom to recover its costs of providing this service.

In producing this draft determination the Commission has followed the modelling approach used in the 2004/05 and 2005/06 final TSO Determinations and the 2006/07 draft TSO Cost Calculation Determination.

The total net cost for 2007/08 will be shared according to the TSO Cost Allocation Determination for 2007/08. Its draft is available on the Commission’s website. The draft Cost Allocation Determination for 2007/08 proposed that the costs will be shared amongst the following: Telecom, Vodafone, TelstraClear, WorldxChange, Compass, CallPlus, Woosh, Teamtalk, Airnet and NZ Communications.

Interested parties are invited to make submissions on the 2007/08 draft TSO Cost Calculation Determination. The closing date for submissions is Friday 16 January 2009 at 5pm. Submissions should be sent by email to

A copy of the Commission’s draft determination will be available by 1pm on Monday 8 December 2008 on under Industry Regulation/Telecommunications/

Telecommunications Service Obligations/2007/2008 TSO Determination


The Local Residential Telephone Service Obligations (TSO) is the successor to the Kiwi Share. The TSO was established by the Crown to recognise the economic costs that Telecom carries in providing service to commercially non-viable residential customers who they would not otherwise provide service to at an affordable price.

The Commission administers the TSO deed by:

monitoring compliance of the TSO service provider;
determining the cost faced by the service providers in accordance with the Telecommunications Act, unless the amount is specified in the deed;
determining the liable persons; and
determining the apportionment of this cost among the liable persons.

Once the TSO costs have been determined, the costs are shared among liable persons.

The ‘liable persons’ are Telecom and the companies operating public switched telephone networks (PSTN) that are interconnected with Telecom’s PSTN.

Previous TSO Determinations

The final TSO net cost for the 2004/05 TSO period was determined at $52.0 million.

The final TSO net cost for 2005/06 TSO period was determined at $58.2 million.

The TSO net cost determined under the draft TSO Cost Calculation Determination for the 2006/07 TSO period is $62.8 million.

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