Service key not interconnect cuts: users

Montana Wines corporate services manager Arthur Keane expects no great short-term effect from the telecommunications commissioner's decision to halve interconnection fees between telcos.

Montana Wines corporate services manager Arthur Keane expects no great short-term effect from the telecommunications commissioner’s decision to halve interconnection fees between telcos.

By the time savings or cost increases get through to the customer, the charges are "all much of a muchness", he says.

Service is a bigger issue for the company, which is in the course of switching from TelstraClear to Telecom.

Now that the company is almost with Telecom -- the migration is nearing its end -- getting access to Telecom services is far quicker than it was through TesltraClear, he says, which is independent of how much interconnection costs per minute. TelstraClear showed itself inefficient in getting access to the Telecom network to fill gaps in its own repertoire for Montana’s needs, he says.

In contrast, few people in the short term will want access to unique TelstraClear service by way of Telecom, so the same problem will not present itself in the new Montana environment.

Auckland University of Technology, which is a TelstraClear customer, expects to make savings as a result of the determination. According to network specialist Leo Neal, the interconnection rate's potential benefits for TelstraClear pricing and competition got "universal approval" from telecommunications users at an industry event in Nelson last week.

"From a pecuniary point of view, I can see it having a beneficial effect on us," Neal says.

Jim Swanson, IT manager at W Stevenson and Son, says the terms of the company's recent migration to TelstraClear and Ericsson "gives us the ability to go back and discuss pricing". The reduced interconnection fee may be raised at some point during the term of the contract.

However, telecomms contracts "aren't about screwing the provider down", says Swanson, a columnist for Computerworld. "You have to be reasonable. We want to see TelstraClear stay in business."

WestpacTrust, one of TelstraClear's biggest customers, declined to comment on the interconnection issue.

Some users acquainted with the telecomms industry from the inside think any interconnection charge greater than zero is too much; that the ideal is the "bill-and-keep" approach adopted for dial-up internet connections.

A telecomms company's charging structure is basically a marketing decision, says one such source; a matter of how much customers are prepared to pay. While Telecom can plead high interconnection charges, it can raise the price of toll calls and drop the price of other services where it wants to build more of a customer base. The halving of the interconnection charge will simply mean a little more adjustment in those equations.

The industry can see that even TelstraClear is not signalling price drops in a big hurry.

"First it has to make more money for itself," one says, a point discreetly signalled by CEO Rosemary Howard.

"First it has to make a profit," says another user, more bluntly.

Commentators believe Telecom, on the other hand, still has plenty of room in its profit margin after taking its knocks on interconnection to make price cuts and thereby attract more custom.

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