Ministers line up to put heat on Telecom prices

By ANNE BESTON and NZPA

The Government yesterday stepped up pressure on Telecom over its plan to sharply increase new phone connection charges.

Three Cabinet ministers lined up against the new charges, which lift the cost of a rural phone connection from a standard $61.88 to up to $4000.

* Rural Affairs Minister Jim Sutton accused Telecom of "dirty tricks" in trying to get rid of rural customers with the higher charges.

* Communications Minister Paul Swain said he was seeking Crown Law advice on whether the charges breach Telecom's Kiwi Share obligations.

* State Services Minister Trevor Mallard warned Telecom it could miss out on lucrative Government contracts.

Telecom has dropped its standard $61.88 connection fee, replacing it with a "customer density" policy, which could result in some customers paying as much as $4000 for a phone link.

Mr Sutton said Telecom saw rural customers as being more expensive to service, so it was trying to discourage them from getting extra phone lines.

"It does look to me that they are looking to take themselves out of rural New Zealand to the maximum extent that the Kiwi Share obligations allow them.

"I consider this to be a dirty trick."

Mr Swain said he, Economic Development Minister Jim Anderton and Mr Sutton would meet Telecom next week to discuss the new charges once they had received the Crown Law advice.

In Parliament yesterday, Mr Mallard reminded Telecom that the Government was committing tens of millions of dollars to get broadband services - high-speed internet access - into rural areas.

It had a choice between using Telecom's wires or other companies which could provide satellite access .

"If Telecom is not a little bit careful, there's a danger of being left out in the cold in this area," he said.

Telecom public affairs manager John Goulter said the company had investigated its Kiwi Share obligations, and was confident its new pricing policy was legal.


Telecom customers were fuming yesterday over the new policy.

One man said the company quoted $3000 for a new line when the house already had a phone.

Builder Terry Hicks said he could not believe it when Telecom told him the price of of putting another line in his home east of Warkworth.

"It's not like it's a new connection, all they have to do is put in a jackpoint," he said.

"I was flabbergasted.

"It's really just for internet use, and with teenagers in the house the phone gets a bit congested.

"But when the woman on the phone told me the cost I said, 'you must be joking'."

Mr Hicks said he refused to pay the new charge because he was an existing customer and his house, near rapidly growing Omaha Beach, was not "in the middle of nowhere".

Federated Farmers and National MP John Carter also attacked the company, accusing it of discriminating against rural customers.

Mr Carter said the Government should have made its expectations clear when it signed the new Kiwi Share agreement less than a year ago.

"Any stuff-up or oversight by the Government in negotiating the deal shouldn't allow Telecom to shaft rural areas," he said.

Federated Farmers Waikato president John Fisher said Telecom was challenging the agreement and urged rural customers to make their views clear to the company.

The Kiwi Share agreement says Telecom must make sure all areas get equitable coverage and services.

Under the new three-tier pricing system, people in sparsely populated areas will pay as much as $4000 for a telephone link.

In centres with between 1000 and 9999 households, it will cost $250.

If the price of a new connection was more than $20,000, Telecom had to decide whether it would do it, because it was uneconomic over a long period, said Telecom's chief operating officer, Simon Moutter.

In the past, residents in remote rural areas had been asked to contribute to the cost of installing a telephone, but that policy had not been "hard and fast".

Mr Moutter said the price rise was not big when considered against the several hundred thousand dollars a new home would cost.

South Auckland resident Rachelle Nota rang Telecom when she read yesterday's Herald story on Telecom's new policy.

The bill for a phone at the family's new Patumahoe home, northwest of Pukekohe, is now $1500 instead of the $61 quoted a month ago - plus the cost of laying new cable.

Telecom connects about 16,000 new phones a year.

Under the new policy, about 80 per cent of customers will be charged $95 and about 10 per cent $250.

Between 1000 and 2000 mostly rural customers will have to pay connection charges of more than $1000.