TSO Tendering response: Let us at them

The nation's commercially non-viable telecommunications customers will soon be hotly fought over if reaction to the government's proposed tendering process is anything to go by.

The nation's commercially non-viable telecommunications customers will soon be hotly fought over if reaction to the government's proposed tendering process is anything to go by.

Minister of Communications Paul Swain says he has asked officials to work through a proposal that will allow telcos to compete to offer Telecommunication Share Obligation (TSO) services to the so-called commercially non-viable customers (CNVC) outlined by the Commerce Commission in its TSO costing. Currently there are around 51,000 so-designated customers scattered around New Zealand.

However, despite their non-commercial designation, network providers are already expressing a keen interest in having their business.

Woosh Wireless CEO Bob Smith says he would be delighted to offer them service.

"Tendering out the TSO is absolutely the right thing to do. At the moment the TSO is a barrier to competing infrastructure."

Currently all telcos that meet the criteria are required to pay Telecom a percentage of the cost of maintaining the TSO to these non-viable customers. That has led to the alarming situation, says Smith, of companies having to pay Telecom whenever they take market share off the incumbent.

"It's a tax, really, and nothing more. The more you take off Telecom the more customers they can argue are loss-making and so on."

Smith says if the government is serious about competition between network providers the TSO should be re-thought and in some cases done away with altogether.

"Yes, I think it's time to review the need for it."

Vodafone, the company that paid the largest share of the TSO costs to Telecom, is also looking forward to being able to tender for these customers, according to public policy manager Roger Ellis.

"Vodafone welcomes the minister's announcement that competitors who have to pay Telecom a TSO levy might be able to tender for the work without being penalised through an even higher levy payment."

Ellis says the Commerce Commission's approach of comparing Telecom's network costs with a more efficient fixed-line network provider should be revisited.

"It makes good sense for wireless mobile service providers, who can more efficiently offer service to regional New Zealand, to be able to do so without paying a higher TSO levy to Telecom for the privilege".

BCL, the government-owned wireless network provider, would also be interested in fulfilling the tendering process, but only if required to do so by one of its retail partners, says spokesman Matt Bostwick.

"As a wholesale only provider, we would have to consider the needs of our retail partners who might want to tender for the work." BCL's partners include Telecom as well as competitors like Ihug and ICONZ.

Bostwick says the company will be keen to find out more about the proposed plan before committing itself further, however it already has the capability to offer both voice and data services to such areas.

Ihug, meanwhile, is all in favour of bidding for the customers, according to marketing manager Duncan Shand.

"Obviously we'd work in conjunction with network providers like BCL or Wired Country to offer services to these customers."

Shand says wireless services would be the obvious choice for such a service in remote and rural parts of New Zealand.

The chief executive of the Telecommunications Users Association (TUANZ) Ernie Newman says the association supports the move and has been mooting it for some time now. In 2002 Newman wrote a press release on the subject that outlined TUANZ's opposition to the TSO and the cross-subsidisation that occurs between metro and rural customers.

"Why would a property developer in the Far North commission a cheaper, better and more modern phone system from Walker Wireless or Vodafone, if by choosing Telecom's fixed line service he could have the up-front costs heavily subsidised by other phone users?"

In 2000, Telecom publicly declared its wish to sell off the CNVC parts of its network which at the time amounted to 380,000 customers.

In December last year the Commerce Commission released its final report into TSO costs which outlined the cost of maintaining the TSO obligations.

Telecom spokesman John Goulter says the issue is a complex one that has been discussed for some time.

"Customers clearly want a full telecommunications service and at the end of the day it's a matter of customer choice. Customers can't be bought and sold against their will and there are a lot of complications and difficulties that this idea would involve." Goulter says it is "hard to see how it could all be worked through".

In 2000 Telecom publicly declared its wish to sell off the CNVC parts of its network which at the time amounted to 380,000 customers.

In December last year the Commerce Commission released its final report into TSO costs which outlined the cost of maintaining the TSO obligations.

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