Reform or miss out, NZ told

By Richard Braddell

New Zealand must have industry-specific reform to open Telecom's local copper network to direct access by competitors if it is to be a competitive "knowledge economy," says a Telstra executive.

Lindsay Yelland is the Sydney-based group managing director of Telstra business solutions and the man ultimately in charge of the Australian giant's business here.

He said open access was essential for competitively priced knowledge or internet-based services to small and medium-sized businesses.

But the policy followed by the Government and Telecom would lead to an expensive "overbuild" of telecommunications networks, ultimately paid for by consumers, as occurred in the multi-billion dollar duplication of cable networks in Australia.

Telecom and Telstra are at legal loggerheads over Telecom's withdrawal of rebilling services that Telstra has used in operating a comprehensive telecommunications management service offered to business customers in New Zealand.

Mr Yelland said the absence of a wholesale market for telecommunications services was at the heart of the argument, which was exemplified by Telecom's practice of charging competing phone companies more for services such as data links than it would its own retail customers.

He said Telecom's pricing practices during Saturn's entry to the Wellington market were an even more egregious example of predatory behaviour that would not be tolerated anywhere else in the world.

Problems such as putting in place a proper wholesale market, rebilling, local access and number portability could be resolved by a Commerce Commission armed with industry-specific powers and funded by a pro rata levy on telecommunications companies.

But with an election looming, the chances of Telecom acceding to demands for unbundling the local loop were slim, he said.

"We don't expect Telecom to say we want you to have access to the local loop. Their bunker mentality isn't like that."

Mr Yelland said it was unlikely the two companies would cooperate on anything of significance, even though the fast-growing telecommunications market offered tremendous business growth through such ventures.

"I think Telecom has adopted a very aggressive position and obviously, therefore, it's hard to imagine us being partners to any reasonable extent in the market ... With that in mind, we clearly respect them as a worthwhile competitor."

The frosty relations in New Zealand were unlikely to cause Telecom problems in doing business with Telstra in Australia since Telstra was by law required to provide access to its facilities.

Telecom was unlikely to experience difficulties in roaming on to Telstra's CDMA cellular network when it completes its own $160-200 million network in 18 months' time.

Indeed, Mr Yelland said Telecom, and its new associate, AAPT, were entitled to resell Telstra's CDMA or to put their own facilities on its cell towers.

Of Telstra New Zealand's expansion plans, he said decisions about new infrastructure would be made in coming months and they might include deploying microwave links, or using LMDS radio spectrum, probably in conjunction with the largest owner of that spectrum, Formus.

Partnerships with BCL and other market players were also possible.