Telco here to lobby - not to do business

One of Australia's fastest growing telcos is listing in New Zealand but won't do business here any time soon.

People Telecom, which will list on the NZX from Thursday, already had a strong ownership base in New Zealand, said chief executive Ryan O'Hare.

"Nearly 10 per cent of the shares that aren't owned by the four founders are held in New Zealand."

However, O'Hare said that while the company was looking to expand into New Zealand through either partnership or acquisition, he was "nervous" about the market here.

"Until the regulatory situation is sorted out, there's going to be little chance of making a go of it."

O'Hare described the Australian telco market as "behind the times" but called New Zealand's "embarrassing".

"We're listing so we can support our partners and help lobby more effectively in New Zealand."

People Telecom has a strong relationship with Auckland telco CallPlus through founders Annette Presley and Malcolm Dick.

As part of the listing announcement, O'Hare said, CallPlus customers will be able to make free calls to People Telecom customers in Australia.

Dick, who until recently was on People Telecom's board, said he was pleased to see the company enter the New Zealand market.

He left the board to avoid conflict with his company's role as a supplier of technology to People Telecom.

Dick's seat has been taken by former Ihug managing director Martin Wylie.

CallPlus provides voice-over IP (VoIP) technology to People Telecom, which is the basis of a second phone line service the company markets for A$5.50 [$6.03] a month.

While O'Hare would like to offer such a service in New Zealand, the present telecommunications regime does not allow it.

Telecommunications commissioner Douglas Webb had the opportunity in January to recommend Telecom's network be "unbundled" to open it to full competition.

Instead, he devised a wholesale regime for the company to offer competitors that specifically excluded "real time" services, such as VoIP.

O'Hare said that kept companies like People Telecom from investing in New Zealand.

Telecom's wholesale offer is being launched at present.

However, customers are complaining about an increase in latency - the time taken for commands entered on a PC registering on a server on the other side of the network - that makes it impossible to offer VoIP services.

Under the terms of commissioner Webb's wholesale determination, Telecom is not required to provide latency at a level suitable for VoIP.

The commission is reviewing applications from TelstraClear and Ihug for faster wholesale services from Telecom.

Both companies claim Telecom is unwilling to offer the services until next year.

A decision is expected by May 2005.