Wellington, Dec 12 NZPA - Services offered over Telecom's copper local loop by its competitors are proving popular, according to a monitoring report by the Commerce Commission.

"Unbundled copper local loop is a new product wholesaled directly by Telecom's local access network operator, Chorus, to Telecom's retail competitors, and is proving very popular," the commission said in its September quarterly report on telecommunications markets.

The commission finalised the price and non-price terms on which Telecom must make this service available to other telecommunications providers in November last year.

Between the launch in May and the end of September, telecommunications companies have purchased over 12,000 lines from Chorus, which they are using to provide competing retail services to customers, including broadband and telephone services, the commission said.

Telecommunications Users Association (Tuanz) chief executive Ernie Newman said that in many aspects of telecommunications New Zealand was improving its relative OECD ranking, but cell phone pricing was a conspicuous exception.

"Kiwis are typically paying between 23 percent and 46 percent more for mobile calls than the average of the OECD countries," he said in a statement.

Although some alternative service providers were emerging, they were dependent on the two existing networks for their connectivity and therefore, for their pricing.

"To break out of this we desperately need a third network. One has been under construction for some time, but it is being slowed by resource management issues and delays in establishing proper competition policy in relation to sharing of cell towers," Mr Newman said.

The commission's report found that Telecom's shares of the retail DSL (digital subscriber line) market decreased from 76 percent in June 2006 to 66 percent in September.

Most broadband connections in New Zealand are provided over standard copper telephone lines using DSL technology.

One third of DSL connections provided over Telecom's network are wholesale connections provided to another retailer.

Telecom's retail connections have been growing more slowly than the total DSL market.

The recent downturn in Telecom's share of growth in retail DSL connections has been the largest experienced by Telecom, with its increase in retail DSL customers equal to only 6 percent of growth in retail customers for the quarter.

This could be due to the end of its $16.95 broadband at dial-up prices promotion and the high charge for extra data usage in the basic plan in this promotion.

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