Rivals should pay: Milner

Conclusions of a network economics specialist about Telecom's relative profits and losses on services to various subscribers are valid, says Telecom, but questions remain around whether the costs and benefits should be 'averaged' in this way.

The conclusions of network economics specialist John Small about Telecom’s relative profits and losses on services to various subscribers are valid, says Telecom's technology chief Murray Milner. However questions remain around whether the costs and benefits should be "averaged" in this way.

Small says the profit Telecom makes from profitable users far outweighs the costs imposed by uneconomical users.

Milner says the first issue is whether the urban user subsidises the rural user.

"I believe those who create the cost should contribute to the cost.” He says there should be room to raise charges to the more difficult-to-reach users.

The second point is that by having that subsidy, if it is to be allowed, the other telcos benefit from being able to supply services to the remote users Telecom has connected.

Therefore, Milner argues, the other telcos should still make a contribution to the cost of that connection.

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