Telstra NZ wing in the clear, says boss

TelstraClear boss Rosemary Howard is keen to dispel rumours that the company is in choppy waters with the impending privatisation of Australian parent Telstra.

Sydney-based telco analyst Paul Budde says every telecoms decision in Australia will now be made with an eye on the privatisation of Telstra.

Budde envisages the sale by the Australian Government will begin shortly and take up to three years to complete.

Any planned action with TelstraClear by its parent would need to be taken in the next few months.

"There is not enough time to sell it off at a good price, so that would lead to a significant write-off - which, by the way, is often seen as a positive move by the sharemarket and could lead to a share increase."

He said if nothing happened in the next three months, the next three years were likely to be the same, with no support for major investment and no major growth because of an anti-competitive regulatory environment.

Howard said TelstraClear was key to Telstra's plans for competing in the highly integrated New Zealand and Australian economies. "It would be like Telstra not providing services in Queensland," she said.

TelstraClear's objectives include increased customer access and changing the telco environment, two challenges likely to keep Howard as busy this year as they did last year.

It is just over a year since it was announced that Telecom would not be required to fully open its network to competitors - the so-called unbundling of the local loop.

Unbundling would have enabled TelstraClear to buy access to the copper wire running into homes across the country.

Howard said companies could then build their own technology on the copper, develop customer packages, increase competition and lower the cost for services such as broadband internet.

But Telecom was required to make broadband wholesale packages available to other telco retailers.

"In terms of what we've been offered commercially, the wholesale product is so off the mark we've not been able to take it.

"It's got price terms and conditions which are simply not acceptable. It's slower in every direction than the retail products the incumbent is able to supply itself," Howard said.

Although download speeds of 2Mbit/s are available, the Telecommunications Act set a maximum upstream speed of 128Kbit/s.

At faster upstream speeds internet connections can be used for making phone calls.

Howard said the move was designed to limit technology use to internet access only, "because once voices becomes bits and bytes, you're not going to pay a monopoly price for voice like we all do now".

She said 74,000 homes were using broadband by the end of last September. Telecom made a commitment to ensure 30 per cent of these were from wholesale packages but the reality was just 0.05 per cent were.

New Zealand is 95 per cent broadband-capable. Yet a take-up rate of less than 5 per cent is one of the worst in the world.

"When you know how important broadband is to the GDP and productivity of New Zealand - and gosh, we're supposed to be an innovative country, and we are lagging - you've got to be concerned."

Howard said she did not care if TelstraClear bought wholesale technology or built its own, but the answer was the same - competition.

"I would say at the moment you have an incumbent which is still not afraid of regulation.

"When the regulation is tough, suddenly it will see competitors as customers."

Investment plans cancelled after unbundling failed to happen may find an outlet in the development of a third mobile phone network to rival Telecom and Vodafone.

The tendering process is under way with Telstra's Australian partner, Ericsson, among the front-runners.

Howard stressed competition was key to improving a mobile environment with the fourth highest business rates in the world.

Regulation may be necessary to ensure coverage is supplied by Vodafone and Telecom during the build-up phase of any new network.

The road to the regulator's door appears to be sign-posted on all TelstraClear's business paths this year.

"Regulation is an enabler to investment," Howard said.

"We don't want a free ride, we don't want a piggyback. We just want to be able to access customers."