Telstra asks for certainty on interconnection fees

By NZPA

Friday 15th November 2002

TelstraClear today asked the Telecommunications Commissioner to provide long-term certainty by calculating the precise cost of interconnecting with Telecom's network.

Chief executive Rosemary Howard says the rate of 1.13 cents per minute released last week was an interim rate, an approximate price based upon international benchmarking.

The rate reflected the downward trend of interconnection prices but the commission cannot be expected to determine the precise costs for New Zealand without detailed, economic modelling, she said.

"The commission noted the international median for interconnect is 0.66 cents per minute and 0.9 in Australia.

"We expect the price resulting from a modelling exercise would be lower than in Australia and other countries where it costs more to operate a telecommunications network," she said.

The Telecommunications Act envisages a two-part process to establish the cost of interconnection: an interim rate followed by a final rate based on a more comprehensive process of economic modelling.

The commission can only take the second step if asked by one of the parties.

Mrs Howard said the interim rate was only in place for a year and TelstraClear wanted to avoid uncertainty about rates in future negotiations with Telecom.

"Given Telecom's recent comments about the imprecise nature of benchmarking, we are sure they will welcome this process and the setting of a rate which is right for New Zealand," she said.

The commission's setting of an interim rate had effectively undone more than a decade of monopoly pricing.

That's been a huge step forward for competition in the New Zealand telecommunications industry," she said.

"The next step will be more precise and take longer. However it is a step worth taking to ensure the industry does not continue to subsidise Telecom as it has done for more than a decade."

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