PM rejects call to curb Telecom line stranglehold

By Chris Barton

Prime Minister Jenny Shipley has rejected calls from Clear Communications to tackle Telecom's monopoly on nationwide local services.

She says the telecommunicat-ions industry is alive and well in New Zealand.

Clear chief executive Tim Cullinane wants the Government to provide regulations to allow competitors fair access to Telecom's local service.

"Regulators around the world have learned that deregulation alone is not sufficient to create effective competition in telecommunications markets," he said yesterday at the opening of Clear's centre on the North Shore.

"It must be supported by rules that ensure all players gain economic access to monopoly facilities - or the incumbent monopoly can simply continue as they always have, and efficiency gains are not passed on to the customer."

Mrs Shipley said despite Mr Cullinane's comments, Statistics New Zealand's residential phone index showed prices had declined on average 3.6 per cent per annum in real terms since March 1991.

"At the same time investment by the industry has gone up with over 6 per cent of GDP over the last decade [excluding smaller internet providers] accounted for by the telecommunications industry - $400 million of this by Clear."

Earlier Mr Cullinane had disagreed, saying the Government's proposed changes to the Commerce Act did not go far enough - pointing out that New Zealand line charges were the highest in the OECD along with Mexico.

He acknowledged that there was vibrant competition in the tolls market but that missed the point.

"There is next to no competition within local service. Not surprisingly, all independent evidence suggests Telecom continues to make significant monopoly profits from local services which is in fact the key issue," he said.

Mrs Shipley argued that the move to require Telecom to disclose the net economic cost of complying with the Kiwi Share obligations, and to publish twice-yearly financial statements for its local loop business, would address such concerns.

Mr Cullinane said local service competition was more important than toll competition because it had an impact on the country's ability to compete in the knowledge economy of the future - because free local dial-up lines were the consumer's means of access to the internet.

He said Telecom's proposal to control access by herding all internet consumers through a single gateway with its 0867 dial-up proposal was an example of what could not be allowed to happen.

Mrs Shipley said firms had to be more involved in helping New Zealanders to "get the skills they need to equip themselves for the knowledge-based economy."

She said the Government's role in this would be to forge closer links between industry and the education sector.

Mr Cullinane reiterated the need for a stronger Commerce Act and regulation to provide effective access to monopoly services, cost-based interconnection and true number portability.

"Without policy leadership on these issues, Clear believes New Zealand will be consigned to a country lane instead of the information superhighway."