24 Nov 2008

Cost of phone service provision to remote areas rises

3:31 pm on 24 November 2008

The Commerce Commission says it cost Telecom $62.8 million to provide a local telephone service to uneconomic customers in hard to reach areas, in 2006 and 2007.

The company must bear 70% of that cost, but will be reimbursed the remainder - about $18 million - by other telecommunications companies.

The regulator's recommendation is part of its draft telecommunications service obligation (TSO) determination, which will be finalised following a period of consultation.

The TSO sets out the terms by which Telecom must provide a basic national phone service, including a subsidy system for the company.

Telecommunications Carriers Forum chief executive Ralph Chivers says the cost has increased compared to the 2005/2006 year when the total was $58.2 million.

Mr Chivers says companies may contest the total cost, depending on the reasons for the rise.