Explosive Call Growth A Factor In Price Rise

EXPLOSIVE CALL GROWTH A FACTOR IN PRICE RISE

The prices of some Telecom services will increase from February reflecting increased costs and explosive growth in calling.

The increases will affect Telecom’s standard monthly residential line rental, International Calls to mobile phones, the optional wiring maintenance service and Off-Peak National Calls. They are detailed below:

Monthly line rental The standard monthly residential line rental – which provides free local calling – will increase in February for the first time in more than three years.

The rental will increase by $1.71 to $38.05 (including GST) a month, except in the Wellington 04 calling area and Christchurch city and suburbs where it will increase by $1.40 a month to $31.35 (including GST).

“We’ve seen explosive growth in local calling and this has increased our costs,” said General Manager Marketing Kevin Kenrick. “Local calling has doubled in the past four years, due largely to increasing dial-up Internet access. Telecom has invested $119 million in its network to support this growth in free local calling over the past three and a half years.”

There will be no change in the prices of Telecom’s MessageLine, SKY-FI, TVLine, SmartLine, TalkLine, and HomeLine Plus packages. The prices have also not changed for HomeLine Economy (monthly residential charge of $24.75 including GST plus 20 cents per local call), 60s Plus (for those aged 60 and over, which features a monthly line rental of $21.25 including GST plus 11.25 cents per local call), and Budget Link (a service that includes line rental for $17.52 including GST per month available to people in financial difficulties).

In real terms after adjustment for inflation, no residential customer will be paying more for Telecom local service from February 2002 than they were in 1989. Under the Kiwi Share, Telecom agrees to limit any increase in standard monthly residential line rental to the rate of consumer price inflation.

International Calls to Mobiles Prices for International Calls to mobile phones in many countries will rise from 1 February.

Telecom had previously charged the same price for all International Calls even though overseas telephone companies charged Telecom more for calls to mobile phones, Mr Kenrick said. “However, mobile phone use is rising sharply worldwide and more calls from New Zealand are being made to mobiles. Also, International Calls to mobiles are getting significantly longer. We’re unable to keep absorbing the extra costs these changes are generating,” Mr Kenrick said.

The increase affects calls billed to residential HomeLines and to customers on Telecom’s standard business pricing as set out in Telecom’s List of Charges.

Wiring Maintenance The optional monthly wiring maintenance charge for residential customers will increase by 29 cents to $2.24 a month (including GST). “This is the first increase since 1997 but at $2.24, the service remains good value,” Mr Kenrick said. This change will apply with effect from customers’ February bills.

Off-Peak National Calls Off-Peak National Calls will increase by 4 cents to 19 cents per minute from 1 February. There will be no change however to Telecom’s capped price calls such as those included in its $3 Weeknights and Weekends, and $5 Anytime Plan. Capped price calling at weekends and weeknights gives customers the opportunity to talk for up to two hours and pay no more than $3.00 for the call.

These caps limited the price of many calls and had helped significantly reduce the average per minute cost of National Calls in the past three years, Mr Kenrick said. “Caps have changed calling behaviour. Increasingly, customers are looking at the total cost of a call rather than the per-minute price.”

The increase applies to calls billed to residential HomeLines.

ENDS

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