Telecom put on spot over numbers

The Commerce Commission has released correspondence that shows Telecom agreed to a definitive wholesale high-speed internet target, refuting claims by the company that it never made such a promise.

In reporting its first-quarter results on Friday, Telecom trumpeted reaching one of its self-imposed goals regarding high-speed internet services - that is, the accumulation of 250,000 residential customers by the end of this year.

It was understood by the industry, regulators and Government that Telecom also had a second self-imposed goal - that one-third of those customers, or about 83,000, would come through competitors wholesaling or reselling the company's services.

Telecom had been tracking poorly in that regard, signing up only about 47,059 as of September 30.

Failure to meet either of those goals is likely to incur regulation.

But the company restated its position on Friday, arguing that no firm wholesale number had been agreed to. Telecom said it had instead originally suggested that a third or more of growth in residential connections would come from third parties.

However, as a pair of letters released yesterday indicates, Telecom and the commission appeared to have reached an understanding in February, at the latest.

In a letter dated February 8, 2005, Telecom government and industry relations manager Bruce Parkes wrote to Telecommunications Commissioner Douglas Webb to clarify the wholesale target.

Webb responded in a letter dated February 21, reiterating the two key targets - 250,000 residential customers, "of which more than a third will be represented by resold Jetstream products or wholesaled bitstream services".

Webb also wrote that the commission and Telecom negotiated extensively on the proposed regime and the company had not identified either of the two main targets as problematic.

The commissioner also quoted an earlier letter, dated October 7, 2004, in which Telecom accepted the goals and said, "We are happy with the proposed regime".

Webb also referenced a press release issued by the commission on November 5, 2004, that quantified the wholesale target at 83,000 customers.

He said: "Telecom did not question that statement in any way", despite having more than four months to do so.

Parkes yesterday reiterated that growth rather than total numbers had been the company's goal all along, and denied that Telecom was backtracking on its promises.

The company had not previously attempted to reiterate its perceived wholesale target and did so on Friday because "the so-called target was being increasingly cast as a commitment or a target or a promise, and it's been pumped up more and more by our competitors as being a bigger thing than it was ever intended to be or ever was. We felt that it was time to correct the record".

"The [250,000 customer] total was a very firm promise, a categorical statement. The wholesale statement was nothing more than a forecast or an estimate."

Communications Minister David Cunliffe did not agree, saying the Government's clear understanding was 250,000 residential broadband connections with 83,333 as wholesale, and Telecom knew that.

Telecom to Commerce Commission, February 8, 2005: "Our suggestion was therefore that a third or more of the growth in residential connections will come from third parties ... "

Commission's response, February 21: "[In a media release] the commission referred to the competitor sales target, which it quantified as about 83,000 broadband connections. At that time, Telecom did not question that statement in any way ... "