Outrage mounts over rural Telecom connection issue

By PETER GRIFFIN Telecoms writer

Telecom has been tightening the screws on rural customers seeking new phone connections for months.

The company came out with a new pricing regime this week that will see some customers in rural areas face a fee of up to $4000 for a simple phone connection. But Telecom has been hardening its attitude to new customers over a longer period.

Property developer Bill Morris said he had been trying since last year to get Telecom to justify a charge of more than $100,000 to provide 10 sections at Hot Water Beach in the Coromandel with phone lines.

"What they're asking me to do is to upgrade the whole system coming into Hot Water Beach. Telecom have made no attempt to justify the costs."

Mr Morris said Telecom was "double-dipping" on connection costs by asking him and another local property developer to each pay a $50,000 fee to have a new telecoms equipment cabinet installed.

Mr Morris said Telecom refused to explain pricing which was much higher than quotes from its own sub-contractors.

"I get subcontractors of Telecom to give me a quote, and it's not even in the same paddock."

Telecom spokesman John Goulter said the company did not disclose its cost structure for subdivisions for "commercial reasons".

The costs of adding a connection to the network covered more than the contractors' time and resources in physically making the connection, he said.

The cost rose with the distance that the network had to cover and as population density thinned out. For the 1000 to 2000 customers in the lowest density tier, none would pay more than 33 per cent of the average cost of adding a new connection.

"The extra investment needed by Telecom to add a new connection to the network varies widely but is generally within $1000 to $30,000 in rural areas.

"For some connections the cost is much higher and can be up to $100,000," Mr Goulter said.

Political outrage at the pricing changes has led several Cabinet ministers to speak out.

Yesterday the Minister of Local Government, Chris Carter, said he had met central North Island mayors who were furious at Telecom's price changes.

Mr Carter had heard of one subdivision of 250 houses outside Opotiki where Telecom was asking people to pay $2000 per house for a connection.

"With its new charges, Telecom is making $500,000 out of a subdivision on the outskirts of a provincial town."

Mr Carter was concerned some people in rural areas would not be able to reach emergency services because they could not afford Telecom's connection fees.

Across the Tasman, Telstra has a different policy to Telecom, charging a flat rate fee of A$209 ($237) for new connections to its network and A$59 for activating an existing connection.

In remote areas, however, customers were expected to pay for any additional trenching or wiring needed.

Local subsidiary TelstraClear would not comment on its connection policies. Wellington and Christchurch.