By RICHARD BRADDELL
Telecom has put the cost of servicing unprofitable customers under its Kiwi Share obligation at around $100 million a year.
Releasing Telecom's response to the telecommunications inquiry's draft recommendations, Government and industry relations manager Bruce Parkes said preliminary estimates put the costs between $80 million and $120 million.
This was arrived at using the methodology required for the mandatory disclosures Telecom will make for the first time in September. Actual costs could be higher.
The methodology uses a "forward-looking" view of the costs which views them as they would have been, had the unprofitable parts of the network been built to current best-practice standards.
He said the estimates were after deducting $40 million in intangible benefits, such as branding that derived from running a ubiquitous network, and were prepared with the help of a British consultancy.
Telecom opposes the Hugh Fletcher-led inquiry's recommendation that Kiwi Share losses should be met solely by Telecom, arguing they should be proportionately shared across the industry.
But while the level of hitherto undisclosed Kiwi Share losses have been pivotal in industry disputes, the rest of the industry's contribution would still be relatively modest should Telecom get its way, as it still holds between 85 and 90 per cent of the market, and would meet that proportion of the Kiwi Share losses.
Mr Parkes said Telecom would cease to be central point in the market, which in future would consist of numerous players connecting directly to each other and offering a variety of services over different technologies.
He also accused the inquiry of taking a static view of the mobile market with its recommendation that new entrants in cellular be allowed, during their establishment periods, to roam on incumbents Vodafone and Telecom's mobile networks
In some ways the report was cleverly written because from a superficial reading it created the impression of a benign reliance on market self-regulation.
"But the body of the report is completely contrary to their own criteria ... Setting up a standalone regulator with unfettered powers is heavy-handed."
The report recommends that services be regulated only after public consultation and approval of the Minister of Communications.
But Mr Parkes said the first signs of regulatory creep were evident from the proposed regulator's title, electronic communications commissioner, or commissar as he preferred to call the office.
The next areas that would be regulated would be digital TV, access to set top boxes, and high-value operating markets.
"If I was Sky TV, I would find this an interesting report."
