Cheaper rural phone service offered

By SIMON COLLINS

Telephone services to rural New Zealand may be put out to tender to see whether other companies can do the job more cheaply than Telecom.

The move could dramatically boost the speed of internet access in rural areas from 14.4 kilobits a second to the big-city standard of 256 kilobits, by replacing the present copper wires with a wireless service.

Commerce Minister Paul Swain said on Friday that he had been approached by "a couple of companies" offering the cheaper service after Telecom said this month that its Kiwi Share obligation to supply free local calls to the whole country cost it $185.6 million last year.

Under new terms negotiated between the Government and Telecom late last year, the whole telecommunications industry will be required to share this cost.

The chief executive of Auckland-based Walker Wireless, Paul Ryan, said his company planned to start providing rural services within the next year regardless of whether the obligation to serve rural areas was put out for tender.

The company believes it could supply 256-kilobit services for no more than the present average rural phone bill of $140 a month.



The proposal from wireless operators comes as legislation is due to be introduced in Parliament this week to enshrine the new telephone regulatory structure announced late last year, including a new post of Telecommunications Commissioner.

Mr Swain said he was not sure whether the legislation would have to be changed to tender out the rural service obligation.



The Government could also act as a "facilitator" to bring customers together in a region to buy high-speed, internet-capable phone services through, he said.

Telecom's general manager of government and industry relations, Bruce Parkes, said Telecom was "open to possibilities" for tendering out its rural service obligation, but warned that there could be practical difficulties if some rural people declined to join a wireless network.



Telecom's Australian subsidiary, AAPT, had withdrawn from an Australian pilot scheme to tender out the universal service obligation in two regions, he said.

"It turned out to be a lot harder than people think."