Full speed on telecomms reform, urges BT VP

A regulatory heavyweight from Clear's parent company BT urges speed in implementing telecommunications reform here - but may have some questions to answer about BT's performance back home.

A regulatory heavyweight from Clear's parent company British Telecom is urging all speed in implementing reforms to the New Zealand regime - but may have some questions to answer about BT's performance back home.

Larry Stone, BT's international vice president of regulatory affairs, has been in the country this week for the release of Clear's submission to the ministerial inquiry into telecommunications. BT provided some expertise in the preparation of the 460-page document.

Stone says BT is "very positive about the inquiry. It's good to see it moving along so rapidly, and to hear Mr Mallard's comments about e-government. I know Clear were very pleased to secure agreement with Telecom on 0867.

"That's not necessarily a panacea for what might happen in the future, but it's a good step forward. We don't think it obviates the need for thorough regulatory reform coming out of the inquiry."

"The inquiry comes to a resolution around about September and everyone's very aware of the need for speedy implementation afterwards, not least because markets are moving very rapidly.

BT itself is being considerably changed by dint of regulation in the UK, and will have completed a formal separation of its wholesale and retail businesses within weeks.

"One element of that for us to is try and focus regulation on our wholesale rather than our retail business," says Stone.

The regime under the UK regulator, Oftel, looks complex compared to New Zealand's, and includes retail price controls. Stone acknowledges concerns there "there may be increased bureaucracy with regulation but I don't think that necessarily needs to be the case. I don't think we're talking about new regulatory institutions.

"There are no regimes that have moved in the New Zealand direction, despite a lot of time for other countries to look at it. Countries with self-regulatory regimes like Australia and Malaysia are now moving towards more detailed regulation."

"It's not self -regulation or mandated regulation that's the issue. If it's something like number portability or interconnection then the competitive issues are so complex and their positions likely to be so different that without a regulatory process things would be inordinately delayed."

Even so, like the Telecom-owned AAPT in Australia, Clear is faced with the fact that its parent company is often cast as the villain in its home market.

The European Commission recently extended a sharp rebuke over the pace of unbundling in Britain. It BT's efforts to open up its local network to rivals were far too slow and out of kilter with the rest of Europe.

"There's theory and practice," says Stone. "I used to be head of BT's Brussells office and I think it's fair to say that the Commission often mandates things that some countries implement but the technical level is never there. The UK tends to implement on time. It has published a realistic target date - and been damned with faint praise for doing so."

BT has also been pilloried in its home market for hampering access to the Internet with its high service charges. Stone cites Surftime, BT Internet and other initiatives as evidence of BT's commitment to lowering the cost of retail access, but regular users may find themselves grateful they're in New Zealand and not the UK.

The chief complaint against BT has been its tardiness in offering unmetered Internet calls. Standard metered local call rates range from 4p (or more than NZ12 cents) per minute during the day to 1.5p at night and 1p on weekends, and the cost of access has seen the rise of protest groups like unmetered.org.uk.

BT broke the metering barrier recently with a new IP-only service called Surftime, but local users could be forgiven for thinking it makes Telecom 0867 look like a pretty good deal.

Like 0867, Surftime consigns Internet calls to a specific number range (0808), which doesn't attract per-minute call charges.

Unlike 0867, it is very expensive. It starts at £6.99 monthly for nights-only access, but BT customers who want to be able to use the service any time they like will pay £34.99 (more than $NZ110) monthly, plus their voice calls, plus third-party ISP charges.

The difference is, of course, that Telecom introduced per-minute charges as an incentive to use 0867, whereas BT introduced 0808 as a way to escape per-minute charges. And unlike Telecom, BT has never claimed network capacity problems as an issue. At 4p per minute for peak calls, it hardly needs to.

BT subscribers can choose BT as their ISP, signing up for "BT Internet with SurfTime", which works off another 0800 number range and offers free calls - but at a cost of £9.99 per month (slightly more than the cost of a Telecom second home line), and only at evenings and weekends. Calls outside those times cost 2p per minute.

BT also has its own free ISP, BTClick, which, like all the multitude of free ISPs in the UK, is funded out of standard per-minute call rates.

By comparison, New Zealand Telecom customers pay $35 monthly for unlimited voice and Internet calling. Their total cost of access is a fraction that for those who have BT as their local telco, especially if they use a free ISP, such as Clear's Zfree,

In July, BT will launch a high-speed, DSL-based product, BT Openworld, which is roughly the same price as local ISP offerings based on Telecom's JetStream, but is capped at only 512Kb/s - about a tenth of the top speeds available via JetStream.

One aspect of pricing that is much lower in the UK is interconnection charges, which are set by the regulator Oftel at a third and a quarter of those imposed by Telecom. BT's recent financial results actually showed a rise in interconnect revenues as competing carriers have come into the market.

BT still controls between 70% and 80% of Britain's access lines and Oftel is considering continuing retail price controls even after unbundling kicks in next year.

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