Rural phone costs fall by a quarter

The telecoms sector, dominated by Telecom, has had the cost of providing phone services to isolated communities cut by more than a quarter.

The country requires the industry to provide basic services to about 65,000 consumers in isolated and rural areas, with Telecom providing the bulk of uncommercial services.

The Commerce Commission, which determines the annual costs incurred to comply with these telecommunications services obligations (TSO), estimated the net cost to Telecom at $41.2 million for the year to June 30, 2004.

That compares with a final cost of $56.8 million for 2003, which was 9.4 per cent below that year's initial estimate. At the time, the commission said new technology was making it easier and cheaper to deliver minimum services to homes in isolated areas.

To compensate Telecom for carrying the main TSO burden, its rivals have to share the bill.

Last year, after consultation, the commission apportioned the annual cost among nine firms on the basis of revenue: Telecom paid 72.8 per cent, its main mobile rival, Vodafone, paid 21.2 per cent and fixed-line competitor TelstraClear 5.3 per cent.

Other companies to share the cost were TeamTalk, the Internet Group, Compass Communications, CallPlus and WorldXchange Communications.

- REUTERS