Telecoms groups mainly welcome price ruling

TelstraClear Ltd. and Telecommunications Users Association of New Zealand (TUANZ), the group that represents telecommunications users are welcoming -- with reservations -- the New Zealand telco commissioner's wholesale pricing ruling.

Yesterday's ruling says Telecom must offer services to rival TelstraClear at a 16 percent discount so TelstraClear can resell them at competitive prices.

But the ruling doesn't apply where potential customers are within 200 meters of TelstraClear's network. To be able to supply services to them, a group which TelstraClear estimates will number in the thousands, it will either have to extend its network or pay a price set by Telecom for use of its network.

The 200 meter ruling creates a "no man's land" for many businesses, says TelstraClear chief Rosemary Howard. TelstraClear had argued that the limit be set at 100 meters.

"For customers in the middle -- not on our network, but not far enough away for us to be able to resell Telecom services -- choice and competition won't be available," Howard says.

However, she says reselling Telecom's business services gives TelstraClear the opportunity to provide choice in centers that haven't had it before.

TUANZ head Ernie Newman says the ruling is "more good than bad", with the 16 percent discount great enough to allow TelstraClear to piece together profitable service offerings. While it may not make a profit on reselling the Telecom services, it will be able to bundle those with profit-making services provided over its own infrastructure.

Newman says the 200-meter restriction on availability of the wholesale discount is "perplexing". But he says it is the commissioner's attempt at balancing the incentive to invest in new infrastructure with the incentive to resell services. Having settled on that "arbitrary" distance, many potential TelstraClear customers will miss out on new competition.

However, Newman is hopeful Telecom will see the sense in offering the wholesale discount even where it is not obliged to, to preserve the value of its network. "Every meter of network that TelstraClear rolls out devalues Telecom's network," he says.

TelstraClear spokesman Mathew Bolland was unable to say when services based on the new pricing would be available.

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