Telecom seeks another change to rules

Telecom has asked the Government to again tinker with the rules dictating how it operates, in anticipation of an announcement of rural broadband contracts.

The communications provider is obliged by law to keep the different sections of its business at arm's length.

These separation conditions split Telecom into different units, including a retail, wholesale and network arm.

As well, under "non-discrimination rules" Telecom must offer the same wholesale rates to all service providers which use its network to on-sell phone and internet products.

Since "separation day" in March 2008, Telecom has sought five different variations on the requirements.

In the latest request, the company wants the wording of separation requirements changed as part of its bid to build the Government's rural broadband initiative (RBI).

Telecom (in a partnership with Vodafone) is negotiating with the Crown to build the rural internet network which, with the ultra-fast broadband network, will extend fast internet to 97 per cent of New Zealand.

Under the RBI, fibre internet cables will be laid around rural New Zealand and the price of services on this network subsidised by the scheme.

Because of the subsidises, some wholesale prices will be cheaper in rural areas than in urban centres.

This could breach the rules requiring Telecom to offer the same rates to all service providers.

"What Telecom doesn't want, of course, is getting themselves in trouble with the separation undertakings by actually doing what the Government is requiring of them, which is to offer the subsidised stuff at a cheaper price," said Communications Minister Steven Joyce.

Joyce is seeking feedback and said the issue needed to be quickly resolved to maintain progress.

Telecommunications Users Association head Paul Brislen said that Telecom's proposal seemed reasonable.

"Normally [we'd take issue] to changing the undertakings Telecom agreed to ... But it's probably justifiable in this case."

However, the chief executive of New Zealand Regional Fibre Group, Vaughan Baker, questioned why this change needed to be made before Telecom won the RBI tender.

Joyce said the matter needed to be sorted to "provide a settled environment and wrap up any loose ends".