Telecom issues challenge

By PETER GRIFFIN telecoms writer

Telecom yesterday offered a ceasefire deal to rival TelstraClear, saying their continuing disputes through the Telecommunications Commissioner were "counter-productive".

The response from TelstraClear was a cool rejection.

Telecom chief executive Theresa Gattung took to the stage at the Telecommunications and ICT Summit in Auckland yesterday, challenging TelstraClear to drop its appeals before the commission.

In return, Telecom would abandon its own counter-appeals, which Gattung claims were lodged only to protect Telecom's interests but were expensive to pursue.

"I think it's come to the point where it is counterproductive," Gattung said.

My challenge is this: if TelstraClear will drop its appeals of the commissioner's decisions on interconnect and wholesaling we'll follow suit. We'll drop ours."

Such a suggestion would bring Telecom and TelstraClear into commercial negotiations once again, a process that has often broken down.

In November, the commission set the price TelstraClear must pay to use Telecom's network at 1.13c a minute.

Last month, it said TelstraClear could buy a range of wholesale communications services from Telecom at a 16 per cent discount.

But TelestraClear chief executive Rosemary Howard believes both decisions are too conservative and has appealed against them, seeking bigger discounts.

Gattung also offered to open Telecom's books on wholesaling and interconnect issues and undertake commercial negotiations if TelstraClear would do likewise.

But Howard said she would consider dropping the appeals only if Telecom would supply better pricing than that set by the commission.

That appears to be out of the question for Telecom.

Its government and industry relations manager Bruce Parkes said the commission had done extensive international benchmarking in coming up with its pricing and Telecom respected it.

TelstraClear should drop its "nickel and dime" arguments and save both parties money.

During a panel discussion that tested the diplomatic skills of the industry's main figures, the Kiwi Share was also attacked as being anti-competitive.

Devised to ensure that all New Zealanders can get basic telephone and internet services, the cost of the Kiwi Share (Telecommunications Service Obligations) are soon to be split among the industry players, with Telecom, TelstraClear and Vodafone shouldering most of the cost.

On Friday the Commerce Commission will give its figure for the size of the TSO.

Telecom originally claimed the cost of providing its loss-making customers with basic phone and internet services was around $425 million a year, but the commission has rejected that figure.

Howard estimated the true size of the Kiwi Share was between $35 million and $40 million.

Walker Wireless managing director, Bob Smith, said he had "deep-seated concerns" about the Kiwi Share.

"The KSO should never have been turned into the TSO from the start. There's a fundamental flaw in the way it is structured at the moment."

Telecom's competitors would by default see their TSO contributions rise as they stole market share from Telecom.

"Telecom could claim more and more losses," added Smith.

Walker Wireless was keen to look at taking Telecom's unprofitable customers off its hands through a public tender, providing a more competitive alternative to TSO contributions.

"Let's tender for it and get a true market price," reasoned Smith.

Telecom sent no clear message either way on the suggestion of bundling together its "loss-making" customers and selling them off.

"That's a conversation for when we finish the current TSO deliberations," was Gattung's response.