Swain pulls surprise out of hat for telcos

By CHRIS BARTON and PETER GRIFFIN

TVNZ's transmission arm, BCL, will soon be required to let telecommunications and wireless network operators put their equipment on its towers.

This requirement is a surprise inclusion in changes to the Telecommunications Bill outlined in a supplementary order paper released yesterday by Communications Minister Paul Swain.

The bill is before Parliament for its second reading.

Mr Swain said he was confident the bill would be passed before Christmas.

He plans to announce the new telecommunications commissioner when the bill receives its second or third readings.

Mr Swain said the new clauses for BCL towers were introduced to help in setting up wireless broadband services. Because co-location was a feature of the new regime in the private sector, it should also apply to a Government-owned company.

Walker Wireless managing director Bob Smith said the wireless network operator already had some commercial arrangements with BCL but had been looking to extend those to other parts of the radio spectrum.

The bill would help those negotiations.

The legislation also has conditions for how new mobile operators may use either Telecom or Vodafone's network.

New entrants will need to have a cellular network that "covers no less than 10 per cent of an area in which the New Zealand population normally lives or works".

Other conditions include an assessment by the telecommunications commissioner of the operator's intentions.

One that will benefit from the changes is Econet Wireless, which said in September that it planned to start a rival network to Vodafone next year.

Econet director Tex Edwards said the amendments realigned New Zealand with other OECD countries which had roaming provisions.

"The fact that our competitors, Vodafone and Telecom, lobbied so strongly against the amendments indicates they recognise us as competition and serves to endorse our business case," he said.

The nitty-gritty details of co-location and roaming are likely to come down to negotiations between operators seeking access and the incumbents.

Vodafone has questioned whether cellsite co-location provisions would mean that it would foot the bill to increase capacity on its cellsites so that it could host competitors' equipment.

Mr Swain said the changes to the bill would rule that out.

Co-location and roaming would be made only to new entrants in areas where sufficient cellsite capacity was available and where radio interference did not disrupt the hosting operator's services, he said.

The chief executive of the Telecommunications Users Association, Ernie Newman, said the network investment requirements for new entrants were consistent with international practice on mobile roaming.

"It creates a certain threshold to prove that one is a serious entrant," Mr Newman said.

Referrals to BCL in the bill ensured that the Government was "deadly serious" about the firm having a major telecommunications role in the future.

The order paper also tightens rules about the wholesaling of Telecom services.

Sources within competing telco operators said they were dismayed at wholesale pricing for residential lines being set at the normal retail prices minus 2 per cent.

"On a monthly rental of around $36 that's just 72c - a pittance," one said.

"How can the Government justify that when Telecom discounted residential lines in Wellington where it was competing with TelstraSaturn by between $5 and $8?"

Mr Swain said the 2 per cent was only an "initial pricing principle".

Final wholesaling prices would be worked out by the commissioner under "a retail minus x formula".

Mr Swain said a clause preventing the commissioner from reviewing the issue of local loop unbundling - the removal of Telecom's monopoly on residential lines - for 12 months was to give time for the bill to take effect.

"There's more than enough for the commissioner to do in the first 12 months."