Cost-sharing sparks telco rebellion

By PAUL BRISLEN

The telco industry is up in arms over the amount of money it must pay to cover Telecom's loss-making customers.

Eight telcos must pay Telecom $16.62 million to keep 62,995 customers connected to the phone network.

But Compass Communications has told the Telecommunications Commission that a large percentage of its revenue is delivered over TelstraClear's network and should not be part of the assessment of how much it will pay.

Last week CallPlus said it had cut its operations in half, and as a result no longer qualified as a "liable person" under the terms of the Telcommunications Act.

The commission has released its draft assessment of the costs of maintaining the "telecommunications service obligation" among those customers who are deemed to be commercially non-viable.

Compass chief executive Karim Hussona said the commission had left out a number of liable companies that should, by definition, be included in the cost-sharing.

"The commission has ring-fenced those companies that have an interconnection deal with Telecom and has said they are liable, everyone else is not. That's not what the act says."

The act refers to only two specifications for a company to be included in the cost- sharing exercise. It must have a network that is "interconnected" with Telecom's and it must provide a telecommunications service in New Zealand to end users.

Hussona said that had been interpreted, wrongly in his opinion, to include only companies with an actual interconnection agreement with Telecom instead of those that were using Telecom's network.

A large number of other companies, both telcos and general businesses, would be liable under a strict reading of the act.

"Auckland International Airport, for example. Hotels. Any internet provider that offers a voice service."

Hussona said he was looking with interest at CallPlus' actions in splitting the company in half and would decide whether to follow suit once the commissioner had ruled on it.

WorldxChange co-founder Paul Clarkin was also unhappy with the way the commission had limited the reach of the cost- sharing deal and wanted the issue reopened.

"The commission hasn't included internet providers that are reselling Telecom's service even though those companies are often making more money than I am because I'm trying to build my own network."

Telecom's general manager for Government relations, Bruce Parkes, is disappointed some telcos are resorting to such unusual measures.

"It doesn't reflect well on them or on the industry as a whole."

He believed customers would "take a dim view of it" as well.