Telstra portability deal world’s most costly, say critics

The telco community has met news of the portability agreement between Telecom and Telstra with a mixture of cynicism and criticism, suggesting it is useful only to corporates and is the most expensive portability charging mechanism in the world. Another focus of criticism is that Telstra will have no access to Telecom's network, and will, in fact, have to install its own lines for a client to switch carriers, adding fuel to the criticism that this is by no means a true portability agreement.

The telco community has met news of the portability agreement between Telecom and Telstra with a mixture of cynicism and criticism, suggesting it is useful only to corporates and is the most expensive portability charging mechanism in the world.

The agreement is aimed at large companies and supports the view that margins are becoming difficult to sustain in this increasingly competitive area of the market.

Matthew Walsh, general counsel for Telstra New Zealand, says the agreement “is a positive reflection on all parties involved in that this is the first bilateral portability agreement in the world.

“From a customer perspective, we are looking at increased choice and the full benefits of competition in the New Zealand market. This is a win, and a win for all users,” says Walsh.

Under the terms of the agreement, which is in place for at least four years, the parties will pay a flat fee of $17.50 for each number transferred from one carrier to the other, plus a charge of 0.5c a minute on all re-routed calls. This contrasts with agreements overseas where the customer pays on a per-call basis as opposed to a per-minute charge.

Says Bell South spokesperson Mark Champion: “This is not the first time the two parties have announced an agreement of this nature. So the question you have to ask is, why announce a deal twice? Progress needs to be seen to made, particularly with the apparent impatience of the government and the entry of the Commerce Commission into the portability issue. So you have to take the agreement in the context of the last couple of weeks.”

In May, the two companies said they had a temporary portability and interconnection agreement.

Another issue that has raised a few suspicions from industry commentators is the fact that Telecom was due to announce its latest profit figures 36 hours after the portability announcement

Anna Radford, general manager of corporate communications at Clear, says the agreement does not get around the central issue. “The dominant player still owns the numbers, so the upshot is that the consumer is not getting the benefits of full and fair competition.”

Another focus of criticism is that Telstra will have no access to Telecom’s network, and will, in fact, have to install its own lines for a client to switch carriers, adding fuel to the criticism that this is by no means a true portability agreement. It is neither practical nor cost-effective to install lines into domestic areas and, as such, Telstra is offering the service only to corporate clients already connected to Telstra in the central business districts of Auckland and Wellington.

Grant Forsyth, chief executive of user group TUANZ, was optimistic but realistic in his views on the deal. “This is a good step forward. It is pleasing that both sides of a very complex coin seem to have been addressed. Our concern is that the cost appears to be the highest in the world. Will the price they offer users be competitive and attractive enough to be a choice for businesses?”

Forsyth believes such agreements should help motivate other negotiations.

The Minister of Communications, Maurice Williamson, applauded the number portability agreement.

Williamson hoped the agreement would signal the beginning of the end of the portability issue. “The stage for agreement on number portability has been set for some time and I’m glad we are moving toward a unilateral portability agreement without the need for legislation,” he said.

“New Zealand has the best operating environment for telecommunication companies in the world and it is interesting to note that litigation between telecommunications companies is, more often than not, largely due to attempts to gain commercial advantage.”

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