Telecommunications Inquiry

New Zealand Government Media Release

8 January 2001

The Government's response to the telecommunications inquiry will mean better phone deals for many homes and businesses in areas such as South Canterbury, according to Aoraki MP and Rural Affairs Minister Jim Sutton.

Communications Minister Paul Swain announced the response just before Christmas.

Telecom will retain ownership of the local loop-  the wires from the exchange to the phones -  but it will have to allow discounted access for other providers. This means real competition in the New Zealand telecommunications market for the first time since the industry was deregulated 10 years ago.

As a direct result of that lack of real competition, it has been estimated that subscribers have been overpaying for their phones to the tune of $300 million to $400 million a year.

As part of the deal when Telecom was sold in 1990, it was not allowed to put up the price by more than the rate of inflation, but more importantly, it had to maintain free local calls. This is unique in the world, and the Government has affirmed that this will continue in New Zealand.

As well, Telecom has agreed to spend around $100 million to upgrade its copper network around the country  - particularly in rural and provincial areas  - so that virtually everyone can get decent access to the Internet and a more reliable phone service. This has been something sadly lacking for those in country areas, who have sometimes been unable to make 111 calls, let alone get an Internet connection.

The Government will establish an industry-specific Telecommunications Commissioner in the Commerce Commission to monitor the industry and to ensure that Telecom meets its enhanced Kiwishare obligations.

The Government has decided not to regulate for every problem, but instead to set up a framework to deal with issues that may arise in this rapidly changing industry.

The commissioner will have various powers to resolve disputes between telecommunications companies and will also be responsible for monitoring the enhanced Kiwishare. Services to be regulated include:

  • telecommunications companies' access to each other's networks;
  • other telecommunications companies' rights to onsell Telecom services;
  • number portability (letting customers keep the same phone number, including mobile, when they change companies); and
  • a base level of data transmission to 99 per cent of all phone lines (1.3 million customers) within two years of the passage of legislation, providing an absolute minimum Internet access speed of 9.6 kbps.

"This is a practical package of reform that will ensure rural and provincial householders get affordable access to modern telecommunications, without locking New Zealand into a year 2000 technological time warp," Mr Sutton said.

For more information, contact:

Cathie Bell on 04 4719855 or 025 998467

Contact MPI

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