Telecom told to give away its rural services

By PHILIPPA STEVENSON

Newcall Communications wants the Government inquiry into telecommunications to give networks back to rural communities.

Newcall's managing director, Norman Nicholls, says a recommendation that Telecom meet the needs of rural customers by extending its service to include "slow-speed data" would condemn rural customers to substandard service.

Agriculture officials have reported growing concern about the "digital divide" between rural and urban telecommunications.

Traditional copper wire, which gives 95 per cent of Telecom's rural customers 14 kilobyte-a-second internet access, has been replaced in cities by high-technology lines capable of 33 kb/s and 56 kb/s services.

Telecom has estimated that it would cost $550 million to provide all rural customers with 33 kb/s access, the generally accepted minimum for using the internet. To upgrade the existing rural copper network to give all rural customers 14 kb/s access would cost $230 million.

Mr Nicholls is proposing community-owned networks, as in the US, which had around 1400 "local exchange carriers."

He says that while such services would be uneconomic, telecommunications are vital to the rural sector.

"As with any crucial service, customers are prepared to pay a fair price for value. They should have the opportunity to influence the 'price versus quality' in their area.

"At the same time it should be recognised that having rural customers on the network is important to urban people and city businesses.

He says the features of such an alternative approach should be:

* Majority ownership of the network through regional trusts (similar to some power companies).

* Fully commercial operations that set their own prices, make capital investment decisions and raise capital.

* Access to a rural telecommunication fund, built up through a levy on all toll calls (likely to be less than 1c a minute).

Mr Nicholls suggests a trial covering a defined area with 10,000 to 20,000 customers. Based on Telecom's 200,000 uneconomic customers, he says New Zealand could have 10 to 15 private local exchange carriers, to which Telecom should transfer existing assets at no cost.

"Since Telecom says it is costing upwards of $120 million a year, or $600 a customer, it can be argued that Telecom should pay the company to take them away."

He says the trial should last two to three years and cover contracting out activities such as design, installation and network management to other suppliers, including Telecom.

Interconnection and service agreements could be put into place with other companies and additional revenue earned from services such as messaging and call waiting.

Meanwhile, Federated Farmers is saying Telecom's competitors should contribute to the cost of upgrading rural lines to improve internet access.

Telecom has said it supports the concept of encouraging and enabling New Zealanders to fully participate in the information economy, but this was a social goal and should not be "over-burdensome" on commercial telecommunications businesses.

It said such moves should be paid for by the Government.