Telecommunications reforms 'could gain nothing'

The NZ Institute of Economic Research, in a report commissioned by Telecom, says the economic gains from proposed reform of the telecommunications industry could be close to zero.

In what has become a clash of economic guns for hire, the institute was reviewing an assessment of the reforms by Auckland University's Centre for Research in Network Economics and Communications, commissioned by the telecommunications inquiry.

That report said the cost savings to telecommunications users from the reforms could be $328 million, resulting in an overall gain to the economy of $48 million.

The institute also considered a further report by Network Economic Consulting Group, an Australian consultancy linked to Telecom economic consultant Henry Ergas.

The Australians estimated that economic gains were half those claimed due to "a number of significant errors."

Yesterday, an author of the original report, John Small, lowered his estimates of potential gains, reducing the likely savings in the cost of telecommunications services to $200 million and the wider economic benefits to between $20 million and $40 million.