KEY POINTS:
Communications Minister David Cunliffe has hinted a Labour government would ease regulations, allowing merit reviews of Commerce Commission telecommunications decisions.
"Progress is being made across the industry, including by Telecom, towards implementing operational separation and strengthening competition and investment to the benefit of consumers," said Cunliffe.
"I cannot exclude the possibility that at some future point, if progress continues, a further review of the merits review issue may become appropriate."
Cunliffe was responding to pre-election gripes aired by Telecom chief executive Paul Reynolds, who described the system for challenges as "odd", "very unusual" and different from what was being implemented in other markets.
He told the Independent newspaper changes were needed to "give more certainty" to Telecom commitments to capital expenditure.
The push and political backing to meet demands will be welcomed by shareholders, who have seen the Telecom share price slide. It closed yesterday at $2.31.
Activist shareholder Elliott International has raised concerns about the ability of the company - which provided investors a good return in a laissez faire regulatory system - to get back on track.
Telecom yesterday insisted Reynolds' comments - made just two weeks before election day - were consistent with past remarks.
But the stance is a turnaround for the chief executive, who has improved the dire relationship between the company and Labour and oversaw tough obligations for Telecom's division.
Reacting to the Reynolds comments, Cunliffe appeared to acknowledge Telecom's gripes and has hinted that Labour - if it is in government - is amenable to changes.
It is understood that National Party finance spokesman Bill English, who has been targeted by Telecom lobbyists, is also keen for the telecommunications carriers - such as Telecom, Vodafone and TelstraClear - to balance the pro-regulation calls of consumer groups such telecommunications lobby group TUANZ.
TUANZ chief executive Ernie Newman criticised Reynolds' call for a merit-based review, saying it was a worry.
"Please spare us. The system in general is working very well for end users. Let's not try to fix what isn't broken."
He said Reynolds' call risked a return to days when Telecom used reviews to avoid acting on complaints of unfair business practices and delay judgments for several years, at a time of rapid technological change, until the impact of the ruling was irrelevant.
He pointed to an eight-year legal challenge that was completed this year as an example.
Reynolds' comments coincide with planning at Telecom for the future and National Party calls for a $1.5 million grant to boost fibre-optic cable development - on top of Telecom's $1.4 billion investment taking fibre-optic cable from exchanges to cabinets.
After an early push the National Party has been unable to provide details on its scheme - which would almost certainly be implemented by Telecom.
Shareholders Association spokesman Bruce Sheppard said that if the National Party's fibre-optic scheme went ahead, it would effectively be a $1.5 billion subsidy to Telecom which he estimated would be worth 75c a share.
Telco tussle:
* Telecom has been split into three divisions - wholesale, retail and networks and forced to open its network to competitors.
* New regulations administered by the Commerce Commission control how much it can charge and earn from services.
* Telecom complains the regulatory framework is too onerous and wants simpler "merit reviews" to challenge Commerce Commission decisions.
* Labour and National are looking at easing the rules, offering welcome news for Telecom shareholders but worrying consumer group TUANZ. Telecom's protests bring hint of easier regulation
