Telco issues
March 30th, 2005 at 2:23 pm by David FarrarA couple of related issues, which may be of interest.
Computer World has an article on the review currently happening of the Telecommunications Act. A hard issue to make sexy, but an important one.
Also last week the Commerce Commission made a ruling on whether ISPs have to fund TSO (used to be Kiwishare) obligations. Because Telecom are “burdened” with the local loop monopoly, they get to invoice out to other telcos a proportion of the money they lose on unprofitable (generally very rural) residential customers. No allowance is made for the 1 million+ profitable customers incidentially so telcos such as Vodafone and Telstra-Clear have to pay Telecom several million dollars to cover their market share proportion of the loss making customers.
Now some of these telcos were keen to have all ISPs have to contribute to the cost also. This would have led to ISPs having to also pay hundreds of thousands of dollars, or more, to Telecom.
Luckily the Commerce Commission has decided that the cost should only be levied on those with inter-connect agreements with Telecom.
The INZ press release on the issue is below:
PRESS RELEASE: INTERNETNZ
29 March 2005
InternetNZ welcomes Thursday
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March 31st, 2005 at 3:27 am
What I don’t understand, however, is why Vodafone (or any other company, for that matter) should have to pay for an agreement made between Telecom and the government when it purchased the telephony network.
This was an agreement between Telecom and the gummint, and I don’t see Vodafone’s signature on the documents. Telecom has been extremely profitable, and I don’t think they can really complain about conditions they agreed to at the time.
Vote:March 31st, 2005 at 7:19 am
Gurble – I think the other Telcos very much share your viewpoint. It all boils down to a compromise a few years ago when the TSO replaced the Kiwishare which mandated Telecom must provide free local calling etc. There had been debates about whether that included local Internet calls etc and this was the Government’s solution.
Vote:March 31st, 2005 at 8:54 am
I’m sure david that you would agree that Telecom is still very much regulated by the government and there are some good reasons for that.
But Telecom is forced to do unprofitable business as a result and other companies who benfit from that should pay for it.
Telstra never has to deal with a customer that it sees as unprofitable, hence they only operate in the main centers.
In the current environment Telecom is not allowed to compete on price (the must offer the same rates to wholesale customers) or quality (they must offer the same services at the same speed to thier wholesale customers)
Can you give me any other company that is so restrained? It is not fair to put the burden on telecom when other companies get everything for free.
And before you mention that it was not fair that telecom got the local loop and no one else did lets rememeber that the almost the whole network has been replaced since sale and the network is in the process of being upgraded to an IP network anyway.
For some reason even rich conservatives (no implications david) don’t like telecom doing what it is meant to do… make money for it’s shareholders.
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