Review Kiwi share pricing formula, Prebble urges

The Kiwi Share pricing formula, established in 1988, was originally intended to ensure that Telecom provided free residential local calls, limited line rentals, and placed a universal service obligation on Telecom. Now Prebble, architect of the arrangement in 1988, is suggesting that it is time for a change

The Kiwi Share pricing formula, established in 1988, was originally intended to ensure that Telecom provided free residential local calls, limited line rentals, and placed a universal service obligation on Telecom.

Now Prebble, architect of the arrangement in 1988, is suggesting that it is time for a change.

Speaking from Australia last week, Prebble said Clear’s latest case against Telecom was a sign of increased competition in the market — particularly with the entry of Telstra. Prebble believes consumers are about to receive another wave of price reductions and service improvements.

“When Telecom was a monopoly [the Kiwi Share] requirements were reasonable. Now that Telecom is subject to competition even in residential areas it is time to review the Kiwi Share”.

Clear has launched claims against the government and re-filed counterclaims against Telecom for declarations and damages arising from its allegations that the government had failed to ensure that Telecom’s undertakings were honoured.

“Each subsidiary will operate as a separate profit centre and will be required to deal with other Telecom companies on an arm’s length basis, that is, on the same terms and conditions as with competitors,” Prebble said at the time of deregulation.

Clear claims these conditions have not been met and that it has suffered losses as a result.

Communications Minister Maurice Williamson disputes Clear’s position and says the government will not be influenced in its policy development by litigation. “Clear has been able to achieve some 18% market share in the national toll call market, some 20% market share in the international toll market and has launched a local access service,” he says.

Telecom spokesperson Clive Litt says the organisation’s reaction to that is relatively simple. “As far as we’re concerned the competitive environment -— which in fact includes the Kiwi Share — is working well. If Prebble wants to change the Kiwi Share obligation in some way, that’s really a matter which he should take up and discuss in the appropriate environment”.

Clear was unavailable for comment at time of publication.

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