Everyone grumpy at commission ruling

By PETER GRIFFIN

The Telecommunications Commissioner galloped home yesterday with a much-awaited announcement and Telecom's competitors will write out cheques totalling $14.7 million as a result.

After months of number crunching and analysis, the Commerce Commission finally decided that of the 1.3 million residential customer lines Telecom operates nationally, only 51,000 are unprofitable to service.

Just how unprofitable? In the region of $73.45 million a year.

The cost of the so-called Telecommunications Service Obligation, which primarily covers maintaining phone and internet services nationwide, is now carved up among Telecom, Vodafone, TelstraClear, CallPlus, WorldxChange, Ihug, Teamtalk, Compass Communications and tiny player Equant. Who pays what is determined by their market share.

A grumpy Telecom said it would be "talking to the commission about the need to bring some more reality into the exercise".

Telecom, with an 80 per cent slice of the pie, pays nothing, but on an annual basis it will be entitled to millions of dollars in payments.

The bulk of the money will come from Vodafone and TelstraClear, who have 18.7 per cent of the market between them.

Telecom's competitors always knew they would have to stump up, but it didn't stop them from once again condemning the TSO as anti-competitive.

Vodafone's managing director, Tim Miles, a key critic from the outset, said it was a "tax on competition" and would mean higher prices for customers.

"Ultimately the losers under this draft decision will be phone users outside of the main centres," he said.

TelstraClear chief executive Rosemary Howard said the figure equated to 4 per cent of fixed-line telecoms revenue, where overseas the rate ranged from 0.3 to 2.2 per cent.

For Cecil Alexander, general manager of sales at tolls operator WorldxChange, the TSO came in lower than expected.

But Alexander pointed out that the company had to put reserves aside in anticipation of the ruling, a requirement that had tied up much-needed capital.

"How can anybody expect to invest in a country where you don't know what your liabilities are, and now we're a year behind the eight-ball when we could have been spending on infrastructure?"

Telecommunications Commissioner Douglas Webb may not have won any friends with his decision but he said he was "very glad to see it out the door".

He said Telecom's competitors would certainly contribute more to the TSO as they won customers off the incumbent, but he said that was off-set by a reduction in the subsidisation of Telecom as customers departed.

It was beyond the remit of the Telecommunications Act to let Telecom tender off its loss-making customers. Webb thought the TSO cost would not change much as there was little incentive to chase Telecom's unprofitable customers.