TelstraClear shrugs off rival's rises

TelstraClear says it has no plans to match the increase in residential line rentals announced by Telecom.

Telecom residential rentals throughout New Zealand will go up in February by $1.71 to $38.05 a month.

In Wellington and Christchurch - the only areas in which Telecom faces competition from TelstraClear (formerly TelstraSaturn) - rentals will go up by $1.40 a month to $31.35.

TelstraClear spokesman Quentin Bright said it had no plans to match Telecom's increase or review its pricing. TelstraClear charges a standard residential rental of $29.95 a month.

Telecom marketing general manager Kevin Kenrick said an explosive increase in local calling, caused by a significant increase in internet use, was a major factor behind the increase.

He said that although customers without an internet connection would pay costs caused by those who did, the company's Kiwi Share obligations left it with no alternative.

"The Kiwi Share says we cannot charge for local calls and people who use the internet make locals to their internet service providers," he said.

TelstraClear does not charge for local calls, either.

Mr Kenrick said more than 50 per cent of New Zealanders had an internet connection. Telecom had spent $119 million over the past three years upgrading the local network and needed more money to maintain its capacity.

"Telecom loses $180 million a year on our local service. Even with this increase, we'll still make a loss," he said.

The Kiwi Share limits increases in line rentals to no more than the inflation rate, and both the announced increases were in line with this obligation, at 4.7 per cent.

"Having reduced charges in Wellington and Christchurch, the Kiwi Share means we can still increase them only by the inflation rate," Mr Kenrick said.

Telecom also announced increases for calls to mobile phones overseas and to off-peak domestic tolls.

Mr Kenrick said overseas telecommunications companies had been charging more for calls to mobile phones in their countries and Telecom could no longer afford to absorb these charges.

The increase in toll rates reflected a big increase in the length and duration of calls following the removal of per-minute charging for many calls and its replacement with per-call rates.

- NZPA