Telecom plans to lift line rentals by 55c a month

By WAYNE THOMPSON


Telecom is raising home line rentals by 55 cents a month from February.

The cost of the Homeline monthly rental will rise from $39.30 to $39.85, including GST. The 55c rise will also apply to MessageLine, SmartLine and TalkLine packages.

In the Wellington 04 calling region and most Christchurch suburbs, where TelstraClear offers an alternative service, the monthly Homeline price will rise 45c from $32.40.

The company blames the need for the rise on the cost of providing free local calling to dial up the internet.

But Consumers Institute chief executive David Russell said this did not justify the price rise of about $6 a year for homes.

"It was an expected increase because under the Kiwi share deal they are allowed to increase rental by the rate of inflation so I'd be surprised if they didn't," he said.

"But the fact they already have the network infrastructure, customers and unfilled capacity means more calls is only partial justification for the line-rental increase."

Mr Russell said competition had forced Telecom to charge less for line rental in Wellington and parts of Christchurch. "Looking at the price differential it is obvious that if Telecom faced more competition, then their charges would undoubtedly be cheaper."

TelstraClear described the price rise as "shameful" and said it was a clear-cut example of what a monopoly would do if left unchecked.

"New Zealanders will return from their holidays to unjustified increases to their residential line rental," said TelstraClear public affairs manager Matthew Bolland.

The increase will affect up to 95 per cent of Telecom's residential customers and add between $5 million and $6 million to the listed firm's coffers.

The company reported a net profit of $162 million in the first quarter ended September 30 on $146 million for the same period a year earlier.

Telecom consumer marketing boss Victoria Crone said the 1.5 per cent line rental increase would help to cover costs.

"Customers at home are using more than double the call minutes they were in 1999 so their monthly line rental is really good value."

She said Telecom was investing $360 million this financial year in the New Zealand network to keep ahead of demand.