Telecom blames rising costs for line fee increase

Telecom is increasing the residential line rental charges of 700,000 of its 1.2 million customers by up to $28 a year because, it says, of rising costs.

The 5.9 per cent increase of up to $2.35 a month will not apply to those on the Anytime, Budget Link and 60s Plus plans.

Standard homeline rentals will increase by $2.35, from $39.85 to $42.20 a month. In Christchurch and Wellington - where there is competition in landlines from TelstraClear - rentals will increase $1.95, from $32.85 to $34.80.

The wiring maintenance fee, which is optional, will also increase from $2.24 to $2.53 a month.

Telecom's head of consumer marketing, Victoria Crone, said the rental increase was necessary because of rising costs, but national toll calls were now 15 per cent lower than they were three years ago, and international calling was 30 per cent cheaper.

"As anyone who has been to the supermarket or paid a power bill lately knows, prices have been creeping up and that affects us as well as the rest of New Zealand."

The increases are likely to bring Telecom an extra $10 million a year in revenue.

Consumers' Institute chief executive David Russell said Telecom was entitled to increase the charges by the rate of inflation under the Government-imposed Kiwi Share deal.

"It's disappointing for consumers and I don't accept the reasons put forward, which seems to be that everybody else is putting their prices up so why shouldn't we. But they're entitled to do it and while they gave us a holiday on increasing it last year, they've certainly caught up this year."

Whether increased costs pushed more consumers to cut off their landlines in favour of cellphones remained to be seen. In December, the Australian Communications and Media Authority reported a 12 per cent growth in cellphones over the 2004-05 year, but a 2 per cent drop in landlines.

Telecom's head of public affairs, John Goulter, said landline numbers in this country were steady, with about 1.4 million lines for 1.2 million customers. But cellphones had affected the amount landlines used.