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Hamilton based Internet Service Provider (ISP), Wave Internet, rejects the
latest proposal by Telecom whereby ISP's would be forced to bear the
financial cost of delivering Internet calls.

A major factor in the rejection of this proposal is Telecom's recent
admission that their telecomms infrastructure is some four to five years
behind where it needs to be. This comes as no surprise to Wave who believe
that this unacceptable situation is the cumulative effect of several years
of maximising revenues for shareholders at the expense of re-investment in
the network infrastructure.

This apparent lack of capacity planning and infrastructure investment is
supported by the recent 0867 Internet access issue, where Telecom claimed
that their current voice network could not sustain the growth in Internet
traffic. Telecom has effectively "forced" users and ISP's to direct calls
via their "intelligent" 0867 exchange, thereby circumventing the
overloaded parts of the network. The issue at hand is not so much the huge
growth in Internet usage but more the lack of infrastructure investment
and planning. (Predictions of exponential growth in Internet usage have
been available to the general public for a number of years). Telecom now
face substantial deferred costs in order to upgrade their network to
acceptable levels and are proposing to pass these costs onto ISP's in the
form of an Internet access "tax".

The current economic environment will prevent ISP's from absorbing these
additional costs and they would most likely have to pass them onto the
consumer. If Telecom is successful with this proposal they will
effectively have managed to avoid having to re-invest their own funds and
will be leveraging their monopoly position for their own benefit.

It comes back to the fundamental issue of the Kiwi Share Obligation (KSO)
whereby residential users are guaranteed free local calling, even under
the privatised national telecom provider. Telecom argues that data and
Internet calls are not included under the KSO and should be chargeable.
The recently announced "truce" between Telecom and Clear effectively
provides for all Internet traffic to be directed via the 0867 exchange,
the only effective method of differentiating data calls from voice calls.
This would give Telecom full access to and control of Internet dialin
numbers and a simple means of applying their desired Internet tax.

It begs the question of what will happen when VOIP (Voice Over IP) becomes
a major transmission medium for voice calls as opposed to IP Over Voice,
as is happening in the USA? Once IP calls are effectively "taxed" by
Telecom the ordinary residential user will be paying for both voice and
Internet calls, effectively bypassing the KSO. Wave believes that the
government has an obligation to the public to ensure that residential
calls, whether IP or voice are provided free of charge.

Wave Internet supports the call to the commission of enquiry set-up to
investigate the telecomms structure in New Zealand that the new government
legislate that Telecom publish details of the individual elements of their
network, particularly the "last mile" local loop. This would illustrate
whether Telecom's proposed IP call funding being forced onto ISP's is
justifiable or simply a monopoly rent. In addition, government needs to
ensure that checks and balances be in place to prevent a potential
"pricing cartel" between the major telecomms providers in this country.

For further information, contact:-

Wayne Attwell
Manager - Wave Internet  Hamilton  New Zealand
DDI :     	+64-7-834 1917 or Freephone : 0800-80-9283
Fax :	+64-7-838 0977
Mobile :	025 292 3798
Email:     	 wayne.attwell@wave.co.nz 

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