Minister keeping eye on high-speed internet deal

Communications Minister David Cunliffe supports the TelstraClear-Telecom deal signed last week, but will be watching to see how it plays out.

The deal "is a step forward for the telecommunications market. Another major competitor in the industry does increase choice and potentially provide for a better service and price for consumers in the immediate future", Cunliffe said.

"I will be watching closely to see how the deal works in practice."

The two companies on Friday announced a four-pronged deal based on TelstraClear's finally having access to Telecom's unbundled bitstream (UBS) high-speed internet service. TelstraClear said it would now be able to offer broadband to 100,000 of its customers nationwide.

Other terms included improved margins for TelstraClear in reselling phone and other wholesale services; a lowering of interconnection costs; and a one-time payment from Telecom to settle several long-standing issues.

They have also withdrawn all pricing review applications with the Commerce Commission.

The one-year deal replaces a commission ruling last month on the UBS service. Telecom had indicated it would challenge the ruling and, rather than risk being shut out of the market for months, TelstraClear opted for more expensive and slower services through signing the deal.

Cunliffe said the commission's determination would remain in effect until December 20, 2007, should it be required, and reiterated that he was reviewing the telecommunications sector.