Telcos attack 'perverse' bill

By CHRIS BARTON IT editor

New telecommunications service obligations (TSOs) have been widely criticised at a commerce select committee hearing on the Telecommunications Bill, due to pass into law at the end of September.

Leading the attack is Telecom, which says it is concerned that the TSO replacing its Kiwi Share obligation (KSO), which guarantees untimed local calling, will slow the knowledge economy.

The legislation proposes that any losses caused by fulfilling a TSO will be shared across all carriers in proportion to their revenue.

Telecom's general manager of Government and industry relations, Bruce Parkes, told the committee that calls to internet service providers accounted for 60 per cent of the total minutes on "the KSO network," and as such internet service providers should also be required to contribute.

Telecom also wants the share of contributions to be calculated by total minutes rather than revenue - an approach also favoured by Vodafone.

Telecom's submission was critical, too, of the way the new bill calculates TSO losses, saying the methodology "creates perverse incentives for Telecom to sell its rural network."

The legislation proposes that Telecom include indirect revenues and associated benefits in its calculations of TSO losses, which is likely to significantly alter its claim that the KSO loss was $185.6 million last year.

Telecom has asked the select committee to remove the methodology from the bill, or at least exclude indirect revenues from the calculations.

TelstraSaturn said that ideally the TSO framework in the bill should be deleted until a proper universal service policy and finance mechanism could be worked out.

When the what and where of telecommunications services were decided, TelstraSaturn said, the cost should be met out of general taxpayer revenue - "recognising the social policy nature of universal service and the fact that all New Zealanders are likely to benefit in some way."

It also suggested that the Government, and not carriers, should finance the Kiwi Share.

But if that was not possible, it said, industry funding should be based on a share of industry revenue.

TelstraSaturn argued that the bill should not let Telecom off the hook in complying with its TSO, saying clauses which exempt Telecom from the bill's compliance provisions should be deleted.

Vodafone's submissions expressed concern that the TSO provisions "dramatically extend the existing arrangements for funding the Government's social objectives in telecommunications."

It, too, asked for the TSO part of the bill to be changed to a more narrow focus on the KSO and for finance to come from general taxation.