Telecom, Telstra-Saturn join forces in surprise move

In a new spirit of conciliation Telecom and Telstra-Saturn have announced an agreement to cover interconnection, wholesale services, settlement of the companies' rebilling dispute, 0867 questions and pole-sharing.

In a new spirit of conciliation Telecom and Telstra-Saturn have announced an agreement to cover interconnection, wholesale services, settlement of the companies’ rebilling dispute, 0867 questions and pole-sharing.

Telstra-Saturn CEO Jack Matthews says the announcement - made at this week's Tuanz meeting - was not influenced by the recent draft report of the Government’s inquiry into the telecommunications industry.

In the report there is the threat of a Communications Commissioner as a last resort to arbitrate on disputes.

“That question would be more appropriately directed to Telecom”, as it was the party which gave most ground, he says.

“[But] I don’t know that it was totally a coincidence that the agreement has come together at this time.”

Some observers suggest this is the beginning of a grander agreement between the companies in a trans-Tasman context, to split the telecommunications market between them.

Telstra-Saturn would be dominant in Australia and take a small share of the New Zealand market, with the converse situation applying to Telecom-AAPT.

However, Matthews says: “I see us both fighting vigorously for share in both markets – markets which will have to grow.”

Richard Dammery, general manager of Telecom's access and transport group, says the company has been "working on a new approach to interconnection for about a year" so it was not a specific response to anything in the inquiry report.

When Telecom reached an agreement with Saturn on 0867 traffic earlier this year, "we saw that as an opportunity [to pitch the new model] on a broader interconnection front”.

Following the Telstra-Saturn merger, the agreement had to be broadened again to bring in matters specific to Telstra, like the rebilling question.

He surprised some at the meeting by his positive attitude to the draft report, with its provision for a commissioner as backstop appeal beyond the normal commercial processes of negotiation.

“This is preferable to resolving issues by litigation,” he said, adding that perhaps it will discourage telecoms rivals from protracted argument on points which have already been successfully settled in overseas jurisdictions.

Telecom CEO Theresa Gattung expresses reservations about the role of the Commissioner.

The draft report signals his/her ambit as “electronic communications” rather than specifically “telecommunications”, and Gattung questions whether, with convergence “the regulator could find reasons for interfering, say, in TV”.

She says the report’s emphasis on commercial negotiation might be “a spoonful of sugar to help the regulator go down. The locus of power could shift to the regulator, and [resolving arguments] could be all about arguing your case in front of that person or body.”

John Rohan, managing director of Vodafone New Zealand, says the telecommunications inquiry might “not have done the work to see if the consumer will benefit” from the suggested changes. The report “seems very industry focused”.

He questions the inquiry’s recommendation that “roaming” – the ability to make or receive calls on other service providers' cellular networks when users are outside the coverage area of their own service provider's network – should be enforced.

Australian authorities mandated such access between Sydney and Melbourne, he says, “and no one put the capacity in because they didn’t want to share it”.

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