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Telecom OK with new regulations

By Phil Boeyen, ShareChat Business News Editor

Wednesday 20th December 2000

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Telecom (NZSE: TEL) is grudgingly giving faint praise to new telecommunication reforms which the government is claiming are 'world leaders'.

Communications Minister Paul Swain has released the government's response to the Ministerial Inquiry into Telecommunications and describes the new regime as forward looking.

"What we are announcing is designed to bring greater certainty, investment, competition, opportunity and consumer benefit."

The reforms include appointing a Telecommunications Commissioner, but unlike previously recommended the commissioner will act within the Commerce Commission rather than as a stand-alone regulatory body.

"The Commissioner's key functions will be to resolve disputes over regulated services, to report to the Minister on the desirability of regulating additional services and to monitor and enforce Kiwi Share obligations," says Mr Swain.

"A regulated price will only be set if there is a dispute over the price that the parties cannot resolve themselves. The Commissioner does not have the power to overturn commercially negotiated agreements."

Telecom chief executive, Theresa Gattung, says the regulatory framework is a significant change from the status quo and goes further than necessary.

"However, set against the Telecommunications Inquiry Report in September, the Government's approach is measured and pragmatic."

"The Government has sensibly focused on any potential roadblocks to competition and stayed away from undue intervention in a highly competitive industry."

Ms Gattung says Telecom had worked with the Government to determine how the 10-year-old Kiwi Share agreement should be updated.

"Over the next couple of years Telecom has agreed to contribute a big part of the significant cost of upgrading some remote and geographically challenging parts of the rural network," she says.

"We are pleased the Government has agreed Kiwi Share losses should be fairly shared by the industry."

The upgraded Kiwi Share requirements extends geographic coverage to current levels, clarifies that free local calls include dial up data calls, and brings basic Internet access to virtually all New Zealanders by upgrading Telecom's network.

The network upgrade is expected to cost around $100 million.

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