Govt cuts off Telecom's right to remain silent

By Richard Braddell

WELLINGTON - Telecom is to be forced to reveal secret information about profits and losses from its local network and the costs of complying with the Kiwi Share under a disclosure regime to be introduced by the Government before the end of the year.

The regime, long sought by telecommunications new entrants who claim they are unfairly penalised by unduly expensive interconnection agreements with Telecom, appears to embrace most of the proposals in a discussion document prepared by the Ministry of Commerce late last year.

Communications Minister Maurice Williamson said Telecom was angry that it would have to produce another set of accounts, but the disclosures would help end the bickering that has frequently characterised interconnections negotiations between Telecom and other telephone companies.

"It's gone round and round. It even went to the Privy Council about whether there were monopoly rents in the prices Telecom was charging for the local loop and that didn't resolve it either," Mr Williamson said.

Disclosures provisions will be implemented through regulation, with the information posted on the internet.

Among the provisions is a requirement for Telecom to publish twice-yearly financial statements that separate its local network from other telecommunications businesses.

It will also be required to produce separate financial statements and information on the Kiwi Share obligation, including sources of losses arising from its compliance and the overall net economic cost.

Telecom's 0800 service will also be added to a list of prescribed services for information disclosure, while side documents to interconnection agreements that can modify the core agreement terms will have to be disclosed.

Mr Williamson said that out of 12 submissions on the Ministry of Commerce's discussion paper, including six from telecommunications companies, only Telecom's disagreed.

While it had been argued that there was scope for Telecom to hide things away, analysis by consultant Ernst & Young determined that suitable accounting procedures were available.

The changes will result in information being available in time for the renegotiation of the first of the interconnection agreements, with Clear Communications, which expires at the end of next year.

Mr Williamson said the disclosure regime formed an equal part of a "trifecta" of reforms he had sought that also included the lowering of the Commerce Act dominance thresholds announced on Monday and the numbering agreement concluded earlier this year.

Telecom spokesman Clive Litt said meeting the Government's new reporting provisions would cost Telecom "millions of dollars a year."