Between the lines: Telecom needs ring of responsibility

By RICHARD BRADDELL

When Telecom's submission to the telecommunications inquiry is made public, it could turn out to be just as good a guide to how it sees its corporate future as it is to its regulatory beliefs.

It has already indicated that its corporate future could involve spinning off some of its high-growth operations. But it could also mean splitting the company into a new Telecom containing all the high-growth buzzy bits, and leaving behind or de-emphasising old Telecom with its increasingly commoditised network.

If so, then all the less reason for Telecom to try to stonewall the inquiry.

There are good reasons for thinking that might be the company's strategy. Among them is that Telstra Saturn, a company that did not exist six months ago, is building competing network infrastructure in the main centres.

Far from a being a dilettante, Telstra Saturn is a company of substance, and there is every reason for mutual respect.

And it is rumoured that the Telstra/Telecom rebilling dispute could soon be resolved without recourse to the court hearing scheduled for September. The price would be Telecom's agreement to wholesale services to Telstra at levels lower than it retails them to big corporates.

The fly in the ointment, according to one view, is that Telecom might not want to grant the same accommodation to age-old foe Clear.

But things may not be as intractable between Clear and Telecom as often seems the case. Interconnection negotiations are signalled and people are now talking of a "sea change" at Clear brought by the arrival last November of British Telecom's strategic alliance director Rhoda Holmes.

She has already established a reputation for being savvy and is regarded as the likely successor to chief executive Tim Cullinane, who leaves at the end of next month.

Ms Holmes is said to have had discussions with Telecom chief executive Theresa Gattung. The word constructive seems to be popping up a lot now when interactions between Telecom and the rest of the industry are described.

Nevertheless, constructive should never been confused with conciliatory. If Ms Holmes has managed to get a dialogue going with Telecom, then she has amply demonstrated that she is prepared to attack on multiple fronts.

Telecom is smarting from the latest round of 0867 internet access publicity as Clear's free internet strategy has highlighted the hopeless inadequacy of current interconnection arrangements. There is expectation that the 0867 row will be resolved soon, at least on an interim basis.

The Government's telecommunications inquiry provides Telecom with every incentive to appear responsible or risk an adverse outcome.

Wholesaling to other carriers now would stave off the worst of those, enforced opening of its local copper to competitors.

This is far from a trivial matter, since unbundling of the local loop would enable competitors to bypass Telecom exchanges and run their services directly to customers.

Unbundling in other countries has, in some cases, enabled competitors to upgrade the wire to carry high-value services to the incumbent's disadvantage.

Telecom may have to come up with a good compromise to avoid such a draconian outcome.