Watchdog bares teeth over telcos' wholesaling deals

By PETER GRIFFIN

The Commerce Commission has widened its investigation of telecommunications pricing to include Telecom's wholesaling deals with competitor TelstraClear.

Although the inquiry is welcome news to TelstraClear, it is not as far-reaching as the telco may have liked, stopping short of examining wholesale pricing for "bundled" services TelstraClear buys from Telecom.

Bundled services are packages targeted at different sectors of the market that might include phone-line rental, internet and added services such as call-minder or call-waiting - bundled under one monthly price.

The commission said it was not satisfied that "reasonable attempts" were made by TelstraClear to negotiate with Telecom over pricing of bundled services.

"During the negotiations TelstraClear did not ask Telecom about the bundles it offers, and the commission found no evidence of attempts to negotiate the bundles of which TelstraClear had knowledge," the commission said.

TelstraClear's chief executive, Rosemary Howard, said other wholesaling issues the commission had decided to investigate were more important than bundling.

"I think the commissioner has the right priorities, it allows him to look at wholesale access to retail services and leave the bundling issue with both of us."

She said TelstraClear and Telecom would continue to negotiate the important issue of wholesaling conditions for the residential market, something that was not covered by the commission's investigation.

TelstraClear wholesales Telecom's residential services at a rate of the retail price minus 2 per cent, but wants more favourable conditions.

"It's the wholesaling of residential services that is absolutely critical," Howard said.

Telecom's government relations manager, Bruce Parkes, said the commission's exclusion of bundling showed TelstraClear's attempts to negotiate with Telecom were flawed.

"It sends a message to our competitors that it's not good enough to run off to the commission at the drop of a hat. There's no substitute for proper negotiations."

He said it was up to TelstraClear to start commercial negotiations for bundled telecoms services, something Telecom was willing to do.

The inquiry follows last month's move by the commission to start the process of setting interconnect pricing - the price Telecom and TelstraClear charge for accessing each other's fixed-line networks.