Telecom NZ hits out at proposals

2 Nov 2009

Telecom New Zealand (Telecom NZ) has spoken out against proposed telecoms service obligations (TSO) which will change the way that the provision of phone services to uneconomic customers is funded, ZDNet Australia reports. The company also calculated the costs of the government’s rural broadband initiative (RBI) at up to twice the NZD300 million (USD215 million) suggested in a proposal from the Ministry of Economic Development. The proposals for the TSO and RBI were published by the government last month as part of its review of rural telecoms strategy. In its submission on the TSO and RBI proposals, Telecom said that under the government proposal it would continue to provide the TSO services but the industry would stop contributing towards the cost of providing those services. The company said: ‘The TSO proposal appears to be based on a number of flawed assumptions which have led to the erroneous conclusion that there is not a net cost to Telecom in providing TSO services. Detailed analysis carried out by the Commerce Commission shows clearly that there is a real and substantial cost to Telecom.’ Regarding the RBI, Telecom estimated that it would have to spend at least NZD500 million to meet government targets, assuming it used its existing infrastructure. Without the ability to leverage off existing infrastructure and planned investments, the figure was likely to be significantly higher.