The Ministry of Business, Innovation and Employment is reviewing the telecommunications services obligations (TSO) of Telecom and Chorus, as required by law.
The ministry is required to consult with the Commerce Commission, industry participants, consumers and Maori and to report back to its minister, Steven Joyce, by the end of the year.
The TSO ensures that residential premises connnected to Telecom's network in December 2001 continue to be able to make phone calls and have dial-up internet access, free local calling, free 111 calls and a listing in the White Pages telephone book.
The agreement also ensures line rental charges don't increase by more than the rate of inflation and that rural line charges are no higher than for urban areas.
The ministry says the telecommunications market has changed dramatically since the TSO began in 2001, which raise the question of whether the TSO is still needed and relevant and, if it is, whether it needs updating.
Its preliminary view is that while there may be less need for the TSO, scrapping it would expose consumers in more isolated smaller communities and rural areas to the prospect of less service availability and quality, or higher prices, or both.
There's also a risk free local calling could come with conditions, such as a cap on use.