Competitors concerned over Telecom's network upkeep

Telecom's competitors and unions say the telephone company has been underinvesting in its network and have raised concerns about its maintenance.

Internet service provider Orcon's chief executive, Scott Bartlett, said the number of faults on Telecom's broadband DSL lines was falling.

Orcon uses Telecom's network for its internet services. Telecom's phone and internet network is worth billions and is coming under increased scrutiny as it begins to open it up to competitors as part of local loop unbundling.

The Government announced in May that it would force Telecom to open up the network to competitors, a move that would result in more traffic on the network.

Bartlett said he was also concerned about the ability of Telecom's contracted phone technicians to maintain services.

About 320 staff from network maintenance company Transfield have been involved in an industrial dispute over the past year, refusing to install broadband connections. The workers earn an average of $17 an hour gross, and experienced staff are exiting the industry.

"As one of the largest providers of internet in the country, I am really concerned," said Bartlett. "If technicians are unable to provide support then that has a material impact on my business."

Orcon is also calling for Transfield and fellow network maintenance company Downer to be "unshackled" from their exclusive contracts with Telecom.

The two companies were not allowed to service any other telecommunications companies, Bartlett said.

Engineering, Printing and Manufacturing Union telecommunications industry organiser Paul Graham said anecdotal evidence suggested that Telecom had been underinvesting in the network. "If only the public realise that even if they put in unconstrained [internet] speeds, there is not the workforce to provide it, and their ability to deliver it would be severely restricted."

The Commerce Commission found in July that competitors' services on the network may be at "immediate risk" of being degraded because the company was operating without any clear engineering guidelines.

Telecom chief operating officer Mark Ratcliffe said the company had invested $4.3 billion in the network in the past six years. "We constantly monitor the performance of the network and ensure that investment meets our and customers' needs," he said.

"Telecom's investments have been increasing and are comparable or better to that of comparable telecommunication companies."

Telecom pointed to a survey by Bloomberg in 2005 which showed that capital expenditure as a percentage of sales was higher than Asia Pacific and Europe but lower than North America.

"We are on track to deliver unconstrained plans to wholesale and retail customers," Ratcliffe said.

Broadband growth was not slowing and industrial action was having no impact on that growth, he said.

However, a source with detailed knowledge of Telecom's network said the company had underinvested in its internet and phone network and was struggling to maintain it as the company planned for faster internet speeds next month. Telecom had focused on drawing revenue from its asset and not reinvesting into the network for the past six years, the source said.