KEY POINTS:
Asking a Telecom investor to count his blessings right now might seem a little churlish. After all, yesterday the Government made good its threat by proposing legislation at the harsher end of the alternatives. And a company worth almost $12 billion a year ago is now worth just under $9 billion.
Nevertheless, there are reasons for optimism.
Yesterday's bill shows Telecom has scored at least three important victories:
* The costs Telecom incurs maintaining a connection to customer homes are recognised. For example, when it provides naked DSL - a high-speed internet connection without a telephone service - it will also be able to impose a surcharge reflecting the maintenance costs.
* Telecom will supply products on a "retail-minus" regime. In other words, wholesale prices will be set by subtracting a discount on retail prices. The alternative of a "cost-plus" regime would have given Telecom much less leeway to protect its profit margins.
* The bill also appears to give Telecom's new network division scope to give large customers volume discounts. This means its new retail arm, as the largest consumer of network services, will get discounts commensurate with its scale.
These victories should not be interpreted as Telecom getting off lightly.
Instead, the legislation reaches a sensible balance. It allows Telecom to take advantage of its size for the benefit of users, provides incentives for investment in the network and protects users from the potential abuse of the telco's dominant position.
If the lawmakers had backed away from their rhetoric, the industry would have been in uproar and this is clearly not the case.
Investors should also not regard the legislation as the end of Telecom as a rewarding investment. Yesterday's bill takes the firm another step towards a certain regulatory environment. The UK's BT Group - which has been operating under a similar regime for just over a year - is going from strength to strength.
It may be that the regulatory regime has narrowed BT's focus to growing the business in fair competition with rivals. Hopefully the Telecommunications Amendment Bill will usher in a similar culture here.
