Telecom disputes watchdog's numbers

9.20am

Telecom says its loss from uneconomic customers is about $90 million, rather than the $62.6m calculated by Telecommunications Commissioner Douglas Webb.

Telecom was the first phone company to make submissions to the commissioner yesterday at a four-day hearing on the cost of the Telecommunications Service Obligation, an updated Kiwi Share agreement, by which Telecom has to provide telephone services to 99 per cent of households.

In practice, Telecom shoulders the loss and eight other players reimburse it on the basis of their market share.

Telecom's market share is 76 per cent, Vodafone's 18.9 per cent, TelstraClear's 4.7 per cent and the other players less than 1 per cent.

The Telecommunications Act 2001 requires the commissioner to calculate the cost of unprofitable customers every year. The draft calculation is $62.6 million for the year to June 30, 2003, which players are making submissions on this week.

Telecom is fighting to effectively be reimbursed $7.2 million more by eight other players when it argues the TSO loss should be about $90 million.

Much of the $7.2 million would have to be paid by Vodafone, a staunch opponent of the TSO.

Telecom disagreed with the commission doing its calculation with clusters of customers rather than customer-by-customer.

Using clusters of customers would result in profitable customers offsetting unprofitable ones.

On a customer-by-customer calculation, Telecom said the TSO loss would be between $20 million and $30 million more.

Telecom's group general manager of industry and government relations, Bruce Parkes, said the commissioner's calculations underestimated Telecom's operating costs and trenching costs and overestimated how much wireless technologies could be used in providing telephone services to rural customers.

Mr Parkes said the model the commission was using to calculate the TSO loss set a level of efficiency no real-world telecommunications company could meet.

- NZPA