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Commission's Decisions Must Encourage Investment

Commerce Commission's Decisions Must Encourage Investment

Telecom is concerned that today's decision from the Commerce Commission could lead to lower investment in New Zealand's future infrastructure.

"Naturally we are very concerned that the determination comes under the draft range the Commission had earlier indicated," Chief Operating Officer New Zealand Simon Moutter said today.

"We'll have to examine this interconnection figure to see what the decision will mean and how we will deal with it."

The Commerce Commission in September indicated a likely range of 1.21 to 1.42 cents for toll bypass. In today's determination of 1.13 cents it said it had reworked its international benchmarking, moving the range downward.

"We'd be very concerned if this decision was the start of a trend that showed a short-term focus on prices at the expense of New Zealand's long-term needs," said Mr Moutter.

"We have consistently argued that decisions by the Commerce Commission must allow telecommunications companies to generate the revenue needed to invest in future infrastructure.

“There seems to be insufficient recognition by the Commission about what is required to encourage investment in infrastructure and technology.

"The Government says it wants a knowledge economy and it wants widespread broadband availability. The telecommunications market won't be able to deliver that if we are continually squeezed by a short-sighted regulatory regime.

"We are New Zealand's biggest private infrastructure investor and this year alone had planned to invest more than $400 million in our New Zealand infrastructure.

"We want to sustain that level of investment in the infrastructure that supports the knowledge economy.

"In order to do that we'll be looking very closely at other decisions to come from the Commission on wholesaling and the TSO."

Mr Moutter said Telecom would be considering the decision over the next two weeks and deciding whether to seek a pricing review determination based on a forward looking cost methodology used widely internationally.

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