Dispute rages on calls to mobiles

By CHRIS BARTON, IT editor

Consumers will have to wait six months for cheaper home-to-mobile phone calls - unless a select committee makes last-minute changes to proposed legislation before Parliament.

The delay centres on the introduction of non-code access, which removes the need for consumers to dial a four-digit access number before making land-line to mobile calls via a phone company other than Telecom.

The Business Herald has viewed leaked e-mails between Telecom and competing carriers which show that the introduction of the service, along with lower-cost calls, was expected early this year.

But talks have been stymied by Telecom, whose method of delivering the service means residential users are unlikely to see a wide choice of providers until early next year.

Competing carriers, including Telstra, Clear and CallPlus, are angry with what they see as Telecom delaying tactics and are calling on the Government to step in.

The draft telecommunications bill has deferred regulation of non-code access, also known as carrier pre-selection, until December 31.

Telecom's competitors want the Government to designate no access-code dialling for all phone calls immediately to hasten its introduction.

They argue consumers will benefit from not only easy dialling but increased competition bringing about lower costs.

Most residential users pay Telecom 71c a minute whenever they make a call from their home to a mobile phone. Some using CallPlus or WorldxChange pay much less - between 45c and 55c a minute - but only if they dial an access code such as 0523 or 0566 first.

Despite the lower costs, the extra step in dialling is a turn-off to users, say the competing carriers.

Interconnection costs which the carriers pay to Telecom are about 30c a minute - leaving a margin of about 40c a minute, which competitors say gives plenty of headroom to reduce the price paid by consumers.

Non-code access, which New Zealanders already have for toll calls, was acknowledged by last year's telecommunications inquiry as "having made a significant contribution to the growth of competition for long-distance calls, and much lower prices."

In an e-mail to Richard Dammery, Telecom's general manager of access and transport, Jilyut Wong, TelstraSaturn general manager of industry and carrier relations, said: "A number of players in the industry are concerned about the approach taken by Telecom to fixed-to-mobile non-code access (NCA). In particular, it appears that the Government's decision to defer regulation of NCA has caused Telecom to alter its approach to implementation of this service.

"This change will result in a significant delay and cause a six-fold increase in cost to the rest of the telecommunications industry. It is TelstraSaturn's view that the delay and increased cost cannot be justified, and serves only to protect Telecom's interest to the detriment of the wider industry and end users."

Mr Wong then outlined discussions which took place late last year about how to deliver non-code access, how the industry unanimously agreed with one of Telecom's options, and how Telecom unilaterally decided to implement another, more expensive option.

"Given that the industry had expected this Telecom service early this year, the significant delay is a major impediment to Telecom's competitors and a major blow to end-users," said Mr Wong.

In reply, Dr Dammery said: "Telecom strongly rejects many of the assertions you have made, particularly the way you have characterised our purpose and what you describe as our apparent delay."

He then explained why Telecom had chosen a different way to implement the NCA service " ... to ensure that what Telstra calls 'multi-basket preselection' is available in NZ - i.e. the ability for customers to choose different carriers for national, international and land to mobile toll services."

Dr Dammery said a key reason was to ensure that customers had consented to use a particular carrier for calling services and that they had the option "to express a different preference."

It could not be assumed customers who had already consented to non-code national and/or international toll access would automatically want the same for land-to-mobile calls by the same carrier, he said.

As well as asking for evidence of consent from customers, Telecom also proposes an activation charge of $6.41 a customer - even if he or she already uses the same carrier for non-code access toll calls. It also proposes a flagfall charge of 2c for every NCA call.

Dr Dammery estimated development costs for the service would not exceed $1.25 million and intended it to be available to carriers from August 1 - "provided the project proceeds to plan."

So far only Clear has a contract with Telecom for the service - thanks to a prior deal struck last October - but it has yet to work out commercial terms.

Richard Silver, of GlobalOne, tried to speak for all competitors in his e-mail to the group: "I hope you'll all forgive me for being so upfront, but I feel the need to publicly state what I know you are already thinking: what a complete load of crap. It doesn't take a rocket scientist to figure out that one of the parties is being obstructive and uncooperative."

The competing telcos called for a meeting with Telecom.

The Ministry for Economic Development manager for telecommunications, David King, confirmed it was held in Wellington two weeks ago. He said he would brief the Minister of Communications, Paul Swain, shortly.

Commerce Commission chairman John Belgrave declined to attend the meeting because the differences between the parties could result in a complaint.

He said it was also inappropriate because until the new Telecommunications Bill was passed, such a role was not in the commission's scope.

Mr Belgrave has since been briefed by some of the parties.