Telescum

The Telecommunications Service Obligations is an agreement between the government and Telecom to keep line rentals cheap (by linking them to the CPI), and provide free local calling. However now it is stifling investing in networks.

The government released a discussion document in August on the agreement in, set up 17 years ago when Telecom was privatised.

TUANZ, in a submission on the document has stated that the TSO is stopping companies from introducing new technology and putting money into networks, and creating unintended "perverse and anticompetitive" consequences.

Rural customers, for example, could be better off by using other services such as wireless/satellite/mobile connections however the TSO rules out that competition.

Meeting the TSO amount to $113.4 million a year, of which $78.3 million is paid by Telecom, and the remainder by the likes of TestraClear and Vodafone.

Vodafone regulatory manager Hayden Glass said "The key thing that upsets us is that we end up subsidising Telecom for its wired network in places where we've already built up our mobile network."

What is interesting though, is that Telecom has not been investing very much into the network. Less than half the depreciation allowance of an equivalent wired network.

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