NZ govt forces telco to disclose local loop costs

The New Zealand government made a significant move towards regulation of the telecommunications market last week, by announcing it will require Telecom New Zealand to provide separate financial accounts for its "local loop" business and to disclose the costs of complying with Kiwi Share obligations (KSOs).

The changes to the information disclosure regime are designed to give other companies more bargaining power in negotiating interconnection agreements with Telecom.

Communications Minister Maurice Williamson insists the changes "do not represent a departure from the current light-handed regulatory environment", but seek to make the current regime more effective.

Other telecomms carriers, however, are likely to see this as a significant step toward the regulation they need for full competition.

"Anything that makes the disclosure rules more robust is welcome," says Clear Communications public affairs manager Clayton Cosgrove, "as they've been inadequate to date. "We've still to see how it'll pan out, but if we can get full disclosure things will be better."

WorldXChange chief executive officer Steven Stanford says, "We've felt for a long time that Telecom was taking overly-generous margins, especially on interconnections, [so] we fully support the need for them to disclose more."

Looking at the reductions in interconnection costs over the past two years, "long distance agreement costs are down by 50 per cent, but there's been no subsequent movement in the local area", he says.

The reason is the "competition in the international area". Whether these changes will be enough to increase competition remains to be seen, Stanford says.

In addition to the separate financial statements and KSO cost disclosure, Telecom must now disclose information on its 0800 service and any documents relating to interconnection agreements.

International service costs need no longer be disclosed, because "international calls are now competitively provided", says Williamson in a faxed response to enquiries about the new rules.

The changes will come into effect on January 1, 2000 and the first set of financial statements and KSO information will be available for companies negotiating interconnection agreements which will expire at the end of 2000.

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