TSO - expect a long haul to a solution

It could take the best part of a year to sort out the wrangle over the telecommunications service obligation, says the head of research at Macquarie Equities, David Stanley.

It could take the best part of a year to sort out the wrangle over the telecommunications service obligation (TSO), says the head of research at Macquarie Equities, David Stanley.

"Once we get further down the track there will be submissions from other interested parties. A draft report by the end of the calendar year at the earliest with a final decision currently likely around March 2003, but of course you've got to get through all those other stages without a delay."

Stanley says the whole TSO issue is contentious and that means potential for delay.

"I think there's a good chance this won't get determined finally until June or July of next year."

Stanley says the unique nature of the New Zealand situation means it will take longer to work through.

"It's a complex subject and it's not like you've got a lot of places to compare with. It will be very contentious as a consequence. To make a final determination is going to take a lot more work than is currently presumed in the timetable that's set."

The Telecommunications Commissioner has asked Telecom to re-submit its estimate for the cost of achieving the TSO requirements. Telecom has claimed it costs the company $226.5 million for six months. The commission has given Telecom until the middle of October to re-work the numbers.

"You've got to realise that this isn't really a wrangle between the commission and Telecom, ultimately this is between Telecom and the other telcos," says Stanley.

"You're already starting to get the noise, if you like, in the form of statements from the likes of TelstraClear saying 'if we're aiming to 20% of the market you'll expect us to pay that much?' sort of thing."

Stanley says the new regulatory regime has made the market that much more attractive to new players that there is very little likelihood of any of them pulling out of New Zealand.

"Take a step back to where the market was a year ago before the commissioner was appointed. Where the pricing was for interconnect, for wholesale, no number portability and so on. There were still competitors here, including TelstraClear and Vodafone."

Stanley says a lot of the "noise" is simply posturing as companies ready the commissioner for their points of view.

"It's what you'd expect and they're not doing it by negotiation but by trying to get leverage on public, government and commission opinion."

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