Telecom prepared to move on phone costs

Telecom and the Government last night agreed they were prepared to move on their positions over the company's controversial price rises for new connections to rural residents.

Telecom chief executive Theresa Gattung met six Government ministers in a late-night Beehive meeting that included other Telecom staff and Government officials.

"We have agreed to work together to see if there's a different way around it," Ms Gattung said.

Communications Minister Paul Swain said the meeting had been positive.

Ministers had relayed concerns, particularly from rural and low-income people, about the cost of telephone connections.

Ms Gattung said Telecom had outlined its position "that we don't get anything like cost recovery in connections in rural areas".

Mr Swain and Economic Development Minister Jim Anderton said officials would prepare a report for the Cabinet meeting on Monday.

Both sides have received legal opinions from Crown Law about the Kiwi Share obligation under which Telecom must offer basic services to all of New Zealand at a fair and reasonable cost.

The legal advice is on whether the new pricing system - up to $4000 for some people - is a breach of the agreement.

The Government has warned that Telecom could lose the chance of contracts worth tens of millions of dollars to provide high-speed internet services if it insists on increasing the fees.

- NZPA