Telecom monopoly to go

Press, 23 January 1988, Page 1

Telecom monopoly to go

By

OLIVER RIDDELL,

in Wellington Within a year, the telecommunications industry would have been deregulated, the Government has‘ promised. The Minister for State-Owned Enterprises, Mr Prebble, has described this as “a landmark decision” and one that will mean full competition. The former Post Office, now corporatised as Telecom, had always had a monopoly on providing telephones and the telephone network. The Post Office had been given this monopoly originally as a natural monopoly and one that was thought should be held by the Government, he said. However, technological change

had meant that competition was now possible. Telephone messages no longer had to go by copper wire; calls could be sent by satellite, microwave, or laser beam along fibreoptic cable. Findings in the Touche Ross study, published last month, contained a recommendation that New Zealand should deregulate and remove Telecom’s monopoly over the telephone network, Mr Prebble said. This study had shown that as a result of the Telecom monopoly — internal toll calls cost twice what they would in a competitive environment, international calls were one-third too high, and competition would result in leased lines falling to 25 per cent

of the monopoly price. He said toll charges made up half the average telephone bill, so a fall in toll charges would have a big impact. The Post Office, because of being a monopoly, had been slow to introduce new services, while dictating to customers the range of services they could have. There had been long delays installing new telephones and services. A recent survey asking exporters to list the obstacles to exporting had shown nearly every exporter listing the telephone service as a problem. Good telecommunications would also help regional development; for example, the cartoonist, Murray Ball, could draw

“Footrot Flats” in Gisborne and fax his drawings to newspapers around the world. i, The Minister admitted that the new board of Telecom would have preferred a slower rate of deregulation. Critics had claimed that deregulation would mean the end of the telephone service New Zealand had known. With deregulation all sorts of big changes were going to occur, but competition would ensure that telephone users had more choice, Mr Prebble said. Touche Ross had predicted that deregulation would not lead to huge rises in rural telephone bills. In fact, rural users would benefit from a reduction in toll charges.