Telecom calls for more say in price-setting

Telecom wants more influence over setting prices charged to competitors for access to its phone network and argues the Commerce Commission is not sufficiently qualified to regulate deals it makes with competitors.

The company also wants substantially lower penalties for breaches of the new rules, according to its submission on the Government's unbundling legislation, the Telecommunications Amendment Bill.

The legislation is at the heart of Government plans to force Telecom to open its network to competitors and create a more competitive phone and internet market.

The bill empowers the commission to regulate the price Telecom charges its wholesale customers for access to its network.

Telecom says the present process for commercial reference offers - where the commission regulates a commercial deal- is too slow and the commission "does not currently have the resources and skill" to do this.

Instead, Telecom said, the commission should advise on the content of a commercial proposal but leave the details up to Telecom. The commission would then approve the deal.

Telecom said proposed penalties of up to $1 million for failing to fully disclose its accounts as required by the Bill should be lower.

"In Telecom's submission, the pecuniary penalties proposed here are grossly disproportionate." It noted that in Australia the maximum penalty for the same offence was A$250,000 ($299,000).

British Telecom, however, faces a fine of up to 10 per cent of its total revenue for inadequate disclosure.

Telecom yesterday rallied up 5c to $4.08, continuing its ascent from a 13-year low of $3.95 on Monday. The stock has fallen from around $5.60 since the unbundling decision was made in May.

In its submission, Telecom argues for certainty in telecommunications regulation, saying this would allow it to invest more in its network.

"We cannot deliver what New Zealanders now expect if planning has to go on hold," the company says. "Opportunities for the industry, as well as our business, will be lost."

Telecom does not want the disclosure of its regulatory accounts - known as accounting separation - to be compulsory.

Instead, it wants a model based on operational separation - owning its network and retail operations but with clear rules about how the two parts of the company relate.

Telecom thinks operational separation would deliver the level playing field the Government wants, as it has in the UK.

"We are proposing to go further with operational separation than has been proposed with accounting separation. So accounting separation is probably unnecessary, but could be introduced down the track if it was still felt necessary," said Telecom spokesman John Goulter.

Telecom is strongly against being split into two companies with two separate boards and chief executives - called structural separation.

Under this regime, the company's retail arm is seen as an "anchor customer" and would be spun off.