Telecom bemoans spend-up on latest commission appeal

By PETER GRIFFIN

Telecom has moved to match an appeal from rival TelstraClear over a network pricing determination from the Commerce Commission, but is upset at the mounting expenses it faces.

Telecom's government and industry relations manager, Bruce Parkes, said the group had spent $17.5 million preparing for applications fielded by the Commerce Commission in the past 12 months.

A further $1 million would have to be spent due to TelstraClear's latest appeal, which Telecom had felt compelled to counter-appeal to protect its interests.

"The system gives the appellant rights in the process, so we're cross-appealing to ensure we have equal status," said Parkes.

The industry largely welcomed the introduction of the Telecommunication Commissioner's post as a means of cutting through some of the long, expensive legal disputes that characterised the relationship between Telecom and Clear during the nineties.

But Parkes said Telecom's spending on consultants and lawyers was three to four times greater than it used to spend before the commissioner's appointment.

"So much for getting rid of the lawyers," he quipped.

TelstraClear's latest appeal will seek larger pricing discounts than those set by the commission last month for services TelstraClear buys wholesale from Telecom. Parkes said Telecom had to re-do the sums to justify its claims that further discounts should not be given.

"We have to carry out a costing exercise. There are 98 different products - that's 98 different costing exercises, then they have to be audited and lawyered," he said.

Legal fees are still a major cost for the duelling telcos. But the bills really start to mount up when economists and consultants are used to draw up reports and undertake studies. Telecom has handpicked regulatory experts from around the world to contribute to its Commerce Commission submissions - at great cost.

Parkes said the other rulings, on such issues as network interconnect pricing, local loop unbundling and the size of the Kiwi Share, were also extremely expensive.

Telecom and TelstraClear also received bills from the Commerce Commission for work on determinations that related to them.

The Commerce Commission's own operating costs will amount to more than $3.5 million this financial year.

"Those costs are shared among the industry on a pro-rata basis, with us picking up the lion's share," said Parkes.

TelstraClear's chief executive, Rosemary Howard, said she could not relate to Telecom's estimate of regulatory expenses.

"We do most of the work in our own small team and occasionally use an external consultant. That's about all we need."

She added that reviewing the wholesale pricing set by the commission would not be a big or overly expensive job.