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The Almighty Buck

Telecom NZ proposes 2c/min Modem Tax 110

Alastair Johnson writes "Telecom New Zealand is proposing a 2c/min "modem tax" for all residential customers. NZ traditionally has free residential local calling (part of government requirements from Telecom). Telecom is hoping to get around this by getting all ISPs to get an 0867 number for which their clients can dial without the 2c/min tax, but the 0867 numbers get less priority on the exchanges. Check out the anti-0867 petition at Digital Edge. " The information page essentially says that Telecom will (post-August) allow the first 10 hours per month to be free, but a 2 cent/minute charge to all residential numbers calling 0867. Update: 06/13 10:17 by H : Mea Culpa-I misread, and misunderstood. Click below for a clarification from Gromit:
Actually, what is says is that ISPs (*other* than Telecom) will have to offer 0867 numbers which will be free to call by residential users, but anyone dialling NON-0867 (i.e. local) ISP numbers will be charged 2c/min after 10 hours. In other words, a residential number dialling a local number will get a 2c/min charge (incidentally this goes against the deal the govt has with Telecom.)
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Telecom NZ proposes 2c/min Modem Tax

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  • I'm forced to disagree with some of your points...

    If anyone cares to actually look at the FACTS regarding this case you will find that there are good reasons behind the Telecom move to charging for data to non IP-Net numbers.

    Yes, good reasons for Telecom :) I think it is fairly obvious that the main reason they want to move to this system is so they can get around Kiwi Share. Data calls are costing them (both financially [if the ISP is not on Telecom's network due to interconnect agreements] and in opportunity costs); they can only recoup costs by making local data calls illegal/impossible.

    1. Is is to reduced the load on VOICE circuits so that emergency services etc. can be easily reached. There have been recorded instances of difficulty contacting these services during peek Internet usage hours.

    Those reported difficulties were due to software problems in the call centres; nothing to do with the voice exchanges. Exchanges will dump normal calls in favour of 111 calls.

    2. When dialing into an IP-Net number the caller is on a voice circuit only as far as their exchange. From this point onwards they are on DATA QUALITY circuits thereby increasing their 'quality of connection' and dropping error rates.

    That's no different from normal phone connections. How else would 56k connection speeds be possible?

    3. It reduces some of the costs for the ISP as the 'POP' (dial in number ie. MODEM) is run by Telecom and tey are responsible for all upgrades etc. to
    the firmware of said POP. The circuit from the POP to the ISP is data quality and merely plugs in to their exisiting network.


    My understanding is that this is just a routing issue... the modems, etc. remain with the ISPs.

    4. A large number of ISPs have had no trouble with this concept. Paradise.net (once of the largest growing ISPs in NZ) has recently moved to
    offering their clients access via. IP-Net, this gives them the advantage that they now have Nationwide access and that the connections their clients make to the ISP are more reliable (reducing need for packet re-sends and thus their costs).


    Paradise.net doesn't care because it isn't on Telecom's network; it is with Saturn. And saying that Paradise is one of the "largest growing" ISPs is misleading; they are growing quickly, but their coverage is quite limited and I doubt they even have 10,000 customers yet.

    5. For the 'local' IP-Net option there is NO ADDITIONAL charge levied on the ISP and the caller also gets around the 2c per. minute charge that would otherwise be levied if calling on a normal voice number. IF an ISP chooses to take the 'nationwide' option they will pay an increased fee but this will give them the advantage that they will immediately have notionwide conerage, this increasing their customer base.

    The original plan leaked by Jim Anderton late last year specified that Telecom would pass on the 2c charge from the consumer to the destination ISP. I'm not sure if this measure is in the proposal Telecom are mooting now.

    Cheers
    Alastair
  • From the mid/late 70s through to 1984 the NZ government borrowed large amounts of money to put into industrial projects, and we had a very closed and regulated economy. From 1984 onwards things swung the other way: government departments became State Owned Enterprises, with many of them not being state owned for much longer, and we have the least tarriffs for imports and subsidies for exports in the world.

    One of the companies that was sold was Telecom, and one of the conditions of sale was that there would always be free local residential (as opposed to business) calls, and there were limits on how fast the cost of the monthly line rental could be raised. Businesses pay for their calls of course. ISDN is only available to business, and like leased lines is extremely expensive.

    At the time it was sold it was considered by many to be the most advanced telecommunications network in the world. Since then their has been very little further investment in the infrastructure, and the network is now way behind the times.

    Telecom are the most profitable company in NZ, and makes a lot more money than is considered normal for a telecommunications company of it's size.
    A large part of the reason for their profitability is that they are the dominant player and that there is very little regulation in their sector.
    At one stage our Treasury produced a report that suggested that as Telecom had responibilities that their new competitors didn't (eg emergency calls) they should be compensated for any loss of profits resulting from competition. The way that this would work was that their competitors would pay them the difference between the profit that Telecom made and the profit that Telecom would have made without competition. Fortunately this didn't go very far. Unfortunately there has been no progress made on things like number portability and Telecom are able to dictate terms on deals for interconnections.
    One of the baby bells (or was it two of them in partnership?) set up a company here (Bellsouth, which has since been sold to Vodaphone) to do mobile phones. The man they sent out to run it was asked by a reporter if he would be using similar tactics to Telecom if he were back home (I forget which part of the USA) where the parent company had similar market dominance, and he replied that if he tried he would be sent to jail.

  • Another thing that apparently irritates Telecom is the fact that many calls to ISPs come through the local network (that Telecom own) but terminate in the network of a competitor (usually Clear). Because of various interconnect agreements, this means that Telecom must pay Clear a certain fee per minute of the connection, in effect subsidising the other ISPs. Telecom are trying to own all the numbers that internet calls terminate in so that they can avoid this fee.

    I don't have any sympathy for the poor dears. If they allowed competition into the local loop these anomalies would not occur, and further, Telecom's neglect of the infrastructure leading to overloading could be fixed very quickly.
  • [clip]
    > Thing

    I see large chunks of nz.comp and other nz.* Usenet posters have turned up *grin*
  • As far as I can see there's nothing wrong with what's being done.

    Nothing wrong, except that they are breaking their agreement with the government. They agreed that there would always be free local calls. Now they're saying that local calls to an ISP will be subject to a $.02 per minute tax. According to a previous post, 0867 numbers are not local numbers. Therefore they are not offering free local calls to ISPs now. The customer must pay for local calls to ISPs or use a non-local, lower priority number.

  • There have been hoax rumors going around the US
    and some other countries (Canada or Australia, I think)
    about the Post Office planning to impose a fee on email.
    The Telecom New Zealand thing could be a hoax or generic bogus rumor, or it could be real.
    Telecom providers who offer flat rate calling and have engineered for typical voice traffic don't like model-breaking things like modem usage - but they do get to sell people extra phone lines for their modems, which they do like.
  • GST is 7%. Should try living in New Brunswick, here they compounded the sals and GST. GST = 7% + 11% sales, compounded = 18.77%. Now they harmonized (sp?) it and now it is 15%, but there are no more exclusions (like unsalted penuts were GST free, but not salted ones :-/ )
  • Okay, I'll admit. That's me. (That's one thing about holding one alias for the 5 or so years I've used this one).

    But you have to bear in mind... I was on a computing course. This is a computing website.

    If you either aren't a nerd, or don't like nerds you shouldn't be here. I reccommend you leave. You'll find you hands hurt less if you don't drag your knuckles on the ground like that.... (/FLAME)

  • Telecom is seeming increasingly out of touch with reality...

    Ever since Shirtcliffe (Yes, that's right. The dork that campaigned against electoral reform) retired as Chairman, and Rod Deane changed from CEO to Chairman, Telecom seem to be making more strange decisions. I have to wonder if they're trying to alienate the whole population. If that phone card thing didn't upset you, this will for sure!

    Background to the phone cards (for foreigners):
    Some months back Telecom discovered that all the nice ~sorta digital payphones they installed aren't Y2K compliant, and they're all going to have to be replaced. The thing is, these are magnetic card-based phones, and the new ones won't read the old cards. That card you have stashed in your wallet (for emergencies) is now just a hunka-plastic.

    The outrage here was huge, and Telecom just said (and I'm paraphasing) "So what? Get over it! We know we never mentioned the possibility they might expire before, but they will now. Life's a bitch".

    I have to suspect the new CEO is a few beers short of as six-pack.....

  • Yeah. WRT net access: they link the schools up for free, then hit them monthly for business charges.
  • Telecom NZ has several solutions other than the basic "modem tax". They after all made NZ$900m (about US$500 - on 3m people) last year, so they should be able to afford some capital expenditures. If they had proper telephone switches and a real network, that supported open IN networking standards like ETSI|ITU INAP even ISUP, they wouldn't be in so much trouble. As it is, they are locked into a closed solution from NEC. They haven't been seen to be upgrading their network in a long time, and it isn't changing.

    The inter-switch trunking problem is _very_ easy to solve. Telco's in the US have been doing it for a while now. Nortel, Ascend and other hardware providers have had solutions for years (well Nortel has had one for 3? years, Ascend coming up to 1), the only problem is the short-sightedness of Telecom network managers when they purchased the closed system many years ago....

    The best part of many of the solutions, is that not only does it relieve congestion on the inter-exchange trunks, it actually gives the end user better performance! Also, you don't have to charge more for the service, since it pays for itself in cost savings. Obviously this is just another cash grab from a monopoly Telco looking for some way to prop up it's stock.

    Thankfully, I'm a Saturn subscriber, a local loop competitor in Wellington.

    Jason
  • Here in norway, we have to pay aprox $1/hour nighttime and $2/hour daytime for dialup access.
    Last year, they raised the price for local call internet with over 60%, all while claiming that they lowered the rate, just because they reduced the long-range tax somewhat.
    They put every effort into making long-distance and foreign calls cheaper, all the while maintaining the high cost on the things they earn the big money from: cellular phones and dialup internet.

    Some people don't know how lucky they are.. ;-)
  • I think you are missing the point somewhat. It's more about the fact that the 'Kiwi Share' agreement gives us the right of free residential calls, and that Telecom is moving to take away that right for internet calls, by forcing us to 'admit' that they are different to voice calls by using these special dial-up numbers to avoid paying 2c/min for the calls to our ISPs.

    Sure, it's free to call these new numbers now... but since we are being forced to 'admit' these calls are different to voice calls, they will, sooner or later, start charging for these calls - thus having avoided the agreement they signed when the company was purchased from the Government.
  • The thing is that we in New Zealand are heading in the same direction as everyone else. Full time connections (for example through the Saturn cable modem service) are going to become the norm. Telecom is perfectly aware of the drift away from telephone only services, to such things as cable (Saturn) and ADSL (Telecom!). Why would they do this now? Surely they only need to wait a year or so before the extra demand on telephone lines starts to decrease as these other services take over. I really think their motivation for this move needs to be examined.
  • Of course, there's always the third option: divorce Internet access from the phone company, with options such as cable modem access.

    There's nothing holy about dialup, or using the phone company's network. Heck, the cable companies are even drooling over the possibility that they will be able to use Internet QoS to do phone over the Internet, writing the phone company clean out of the picture.

    This provides an incentive for the phone companies not to piss off their clients with such silly plans. If voice-over-IP ever becomes practical for phone purposes, then the phone companies will only have inertia on their side. Disrupt that inertia now, and what will prop up the telcos when broadband coax or Iridium-style satellite start taking chunks out of their market?

    (Of course, this is the US. If something similar could be started in NZ, perhaps the same effect could be achieved. Having an antiquated phone network sounds to me like an opportunity for a voice-over-IP pilot, using something like fiber to the house or some such.)
  • If you, along with everyone else, actually READ what you are talking about you will find that the customer (ie. calling party) is the person responsible for paying for the call to the ISP. Jim Anderton (as is usual) has got all his facts arse-about face.

    I wasn't sure if Jim Anderton was right about this one or not; that's why I said "I'm not sure about this" in my original post. Keep your pants on :)

    You're probably right in implying Jim Anderton may not be the world's most reliable/inpartial source of information.

    Are you condoning Telecom's actions in your post?

    Cheers
    Alastair
  • You spit blood over dialing a new prefix... what if, for no good reason, you had to tell everyone that your mailing address changed? And the post office would refuse to deliver to the old address? AND if they investigated and decided that you were running a business through your mailbox, they would give your "business" (= home) address to anyone who asked? And it will cost small businesses several billion dollars.
    This is not a joke. The US post office has already made this rule, quietly, despite 8,000 comments against it. Check out http://www.postalwatch.org [postalwatch.org] for more details...

    Chris
  • All those nice shiny digital exchanges, with all the nice digital transmission stuff that telecom claims they installed was infact bought. planned and installed by the NZPO. Yes phones did take a long time to install, but the improvements began way before telecom took over. I know, I worked there, I installed some of the stuff. NZPO also was very good at maintenance, and the telecoms portion of it did re-invest a lot of what it earned in the network.

    Myself and my collegues did some basic calculations at the time on costs/profits - even under NZPO's way overstaffed over maintained etc. way of doing things, you could still make shit-loads of money.
  • A message on this forum prompted me to think in the long term. What I see happenning is this:

    1. Telecom forces everyne over to 0867, Everyone is pissed off.

    2. Telecom degrades quality of connection for 0867 and/or charges for it. Many switch to xtra.

    3. A HUGE market opportunity opens for a company that can provide cheap, fast(er), dedicated (24/7) internet access (eg. Saturn).

    4. This company(companies) moves in, and captures most of the market back from telecom by providing access at a reasonable rate, relaible, dedicated, and OUTSIDE THE TELECOM NETWORK.

    5. End result: Through this chain of events, telecom has lost control of the Internet alltogether, and within a few years, telecom is a dwindling company for those small number of people who still insist on amking direct calls through them (nostalgia, maybe :))

    Feel free to comment, it seems a reasonable rough outline of what is likely to happen if this continues
  • The other dirty trick TNZ has done (I don't think they have changed it), is that they treat all schools as BUSINESSES, and charge them accordingly - even playcentres, kindergartens etc.
  • No, NZ is doing fine. As others have pointed out, Auckland is the largest city, Wellington is the capital. While NZ may not have the highest standard of living (quantity), it certainly has one of the highest quality of living indexes in the world.

    Unlike practically ALL other countries, US included, we now no longer have export subsidies or import tarrifs. That can make us susceptible to external shocks, and countries like the US putting tarrifs on our goods if the locals are unable to compete. In fact the recent US trade rows with Europe are quite funny, since they are about to slap protectionist tarrifs on Aus/NZ lamd to protect their own farmers.

    The economy is somewhat of an experiment in free market theories. I'm not sure it works as well as some would like to believe, and the Telecom problem does prove the need for some controls to ensure the free market is a true free market. Whether a sector is controlled by one big company (Telecom in NZ telecoms, MS in s/w) or govt. it still has the same effect of killing competition and innovation.
  • Telecom NZ is owned by American shareholders, they're the only ones stupid enough to try something like this.

    And dare I say it, they don't care a fig how much the NZ internet user pays as long as the share price and dividends are up.

    Actually, this is not about Net restriction ... I think TNZ are happy to let as many people as possible access as many sites as they can. More tax $$$ and TNZ profits.

    This HAS to be blatant unfair competition. Can't they be prosecuted?
  • I have to laugh at any country that tries to somehow restrict access to the 'net via taxes or censorship. Considering the trend toward globalization, any roadblock to access to information could only harm a country in the long run.
  • I have to laugh at any country that tries to somehow restrict access to the 'net via taxes or censorship.

    I don't think Telecom want to restrict net access; they just want their ISP, Xtra, to become the dominant ISP, and the easiest way of acheiving that is to force all the other ISPs out of the market via net taxes and predatory pricing. (If you read this [talk.co.nz] you'll see that Telecom's ISP, Xtra, is exempt from the charges).

    It's basically _way_ unfair competition... there are a number of issues like this in the NZ telecommunications industry at the moment, and a major problem is that the Minister of Communications and the Commerce Commission are completely ball-less and won't doing anything to keep Telecom in check.

    Cheers,
    Alastair
  • Eventually, I foresee bidirectional wireless high-speed service offering ways around all the constant roadblocks to full-time access around the world.

    Actually, Wellington NZ has already taken a few steps down this path. Some enterprising ISPs have opened up some non-traditional ways of accessing the web in Wellington (mainly to get around Telecom's _absurd_ ISDN pricing [$200 per month plus 4c per minute]):

    (a) Microwave radio: Netlink [netlink.co.nz] offer a wireless service to anyone with line-of-sight to Wellington's University.

    (b) Satellite: Ihug [ihug.co.nz] offer a service made up of down-link satellite and up-link modem called Starnet [starnet.co.nz].

    (c) Not wireless, but still interesting... CityLink [citylink.co.nz] is a 100 Mb/s fibre-optic circuit linking the entire Wellington central business district with about 7 or 8 ISPs, giving up to 100 Mb/s internet access (although the pipes out of NZ can't currently handle that much bandwidth... ;)

    Cheers
    Alastair
  • The PHB's strike again...
  • Eventually, I foresee bidirectional wireless high-speed service offering ways around all the constant roadblocks to full-time access around the world. But, isn't it about time that carriers and governments see that they should be moving towards better service to extract higher fees rather than nickel and diming everyone for the current ultra-low-speed status quo?

  • And they are also not just trying to restrict access to the net, they are trying to get out of the long overdue upgrading needed.

    Yes, Telecom are beginning to roll out ADSL services to Auckland and Wellington in June/July (Auckland and Wellington are the two largest cities in NZ, combined population ~1.5 million).

    What I find funny is that Telecom's announcement specifically mentions that "Internet calls are now considered lower priority than voice - and calls to your ISP may be blocked if the exchange is overloaded". But if I understand ADSL correctly (and if I don't, please post a correction, I don't want to spread FUD!) ADSL goes via copper to the exchange too - if the exchanges can't handle modem calls, aren't they going to melt under ADSL? :)

    Cheers
    Alastair
  • I spend more than 600 hours online per month in New Zealand, and I worked out the charges would approch 80,000 if I don't dial the new prefix.

    This of course makes me spit blood over the fact that I have to change.
    I pitty the ISP's more who will have to re program modems and IPNet features, some approaching the cost of 500,000$ in help desk calls etc.

    But Telecom in a way are right. I know if I wanted to dial 111 (emergency call equilavent to 911) I would want to get through, and not find out that the exchange is blocked by myself, or the 400,000 or so others that as well call ISP's for over 400 hours per month.

    Just my view.

    Rob
  • But, isn't it about time that carriers and governments see that they should be moving towards better service to extract higher fees

    I think part of the problem is that currently Telecom can't make (much) money on data calls. When Telecom was sold off to Ameritech a condition of the sale was that Telecom could never charge for local telephone calls (part of a sale agreement called the "Kiwi Share"). That was probably viewed as perfectly ok by Telecom at the time, because most local phone calls don't last too long and Telecom can still turn a profit by charging for long-distance and monthly line rental. But when you've got 400,000 internet users on the phone for several hours at a time, that's (a) local phone calls that Telecom can't charge for and (b) an _opportunity cost_ (in that, if the phone line wasn't being used for a local data call, then maybe somebody would be using it for a long-distance call, and thus paying Telecom money).

    Telecom only make about ~$NZ1 billion profit each year (a large portion of which goes to overseas investors), so I suppose they feel they need to get a bit more blood out of the stone by applying this "net tax" ;)

    Cheers
    Alastair

  • It's times like this when I'm sure glad that I'm Canadian.

    Oops, GST, I forgot.
  • Oops, GST, I forgot.

    It gets funnier... NZ has GST too :)

    Cheers
    Alastair
  • In Denmark where I live, I pay what is equivalent to US$0.0314 pr. minute during daytime. Half that after 19.00 in the evening to 8.00 in the morning. On top of that is a $0.036 charge per call. I also have to pay for the dialup account (~$10/mo) and the phone-line ($14/mo).
    Net-wise Denmark is hell!
  • Over in Australia, I heard of them routing 000 calls from Tasmania to the Victorian call centre. It seems that half the time when this happens, the Victorian operators do not realise that it is a tasmanian call, and sometimes send Ambulances to towns with similar names in that state. Yes, and people have died because of this. This has nothing to do with ISP traffic.

    I hope they don't pull that sort of stunt over in WA where I live.

    Anyhow, shouldn't it be more effective for an exchange to give calls to one particular number (111 in NZ) higher priority, rather than drop the priority of a different class of calls?
  • Another thing which is truly sickening is the fact that the government ever sold off the company in the first place.

    The lines and equipment that is now owned by
    [snip]
    setting up the damn company, it was pre-existing and ready to run when they bought it.

    yep. also talking about profits and the oringial price it was sold for for all you non-nzers. it was sold for about $4billion (NZ) in 92 i think
    so either it has or will very soon pay for itself.

    Also about the line quality, when our lines went down for about a day and a half the telecom contracters had to dig up a bit of the sidewalk to get to the cables.. of which we were surprised were from 1956 (if i recall correctly). and they were not replaced at all either...
    i wouldn't mind paying my bills if they money went to upgrading the wire network so the whole system will not go down like Aucklands power did last year.

    i wouldn't havedisagreed with telecom too much about this cos their servece is much better than it was decades ago. but seeing as it came about a week after its own flat rate internet i am greatly pissed


  • While I'm definate opposed to the idea of telecom trying to tax NZ net access, I would like to point out that it appears that the petitioners legal stance is slighly off. They state that telecoms actions are contrary to the Kiwi Share agreement which they quote the important part being:

    "Local Call Charging - A local free-calling option will be maintained for all residential customers. Telecom may, however, develop optional tariff packages which entail local call charges for those who elect them, as an alternative."

    While I'm no legal scholor it appears as if telecom has provided them with an Option in which they can call for free. And an additional tarriff, if the customer wants a higher priority line. While its sad that they would choose to single out data lines for such treatment, it doesn't appear nessesary against the agreement.
    Any thoughts?
  • This sounds like the battles going on in the US. The old monopolies lobbied to have the originating telco (where the call is dialed) to pay the terminating telco (where the call is answered) for the service. They thought the balance would be in their favor, and would stifle the new carriers.

    When the new carriers got smart, and gave ISPs really good deals, shifting the balance vastly to their favor, the old monopolies went into an uproar about how unfair the whole arrangement was (even though they were the ones who pushed for that arrangement in the first place).

  • They're smart. Play like the local exchange can't take all the data calls, mention 111 responses being impared, move people to push the old technology exchange to it's limit and never upgrade it...

    and then it falls over, people complain, Telecom say they can't upgrade without raising dial rates and.. you know... it would help if we got that agreement with the Government trashed too.

    (In the long run the only way to get out of bottleneck government restrictions is to act like it's a noose)


    "Hollophone, because all we do is paranoia"
    Little Stalker Boy [chunk.com]
  • of course that is possible, Clear could raise fees which would be bad :( well, let's hope it won't come to that. I signed the petition, just to throw some shit in the fan.
  • In NZ, you can get quite a few capped rate specials for international calls e.g. $NZ5 calls to the UK, talk as long as you like. These "specials" only started happening when clear turned up to offer toll competition.

  • are among the highest in the world - that's why a lot of telecoms gear is tested there. Local calls have always been free, which obviously contributes to this.

    What is ironic, that in the UK, the "free" ISPs still cost more than the per hour ISP fees in NZ.
  • The fact is that Telecom can disconnect any phone line from the exchange when a 111 call comes through. I know this for a fact as I have been on a voice call at night about 2 months ago and I was disconnected and a message played stating that I had been disconnected because of a 111 call request.
    So this basically means that they already have the capability to disconnect calls from the exchange for emergency 111 calls.
    Why can't Telecom just own up to it and say 'Okay we don't like competition and we can't think up a pausible excuse to get rid of them at the moment, so here's a bunch of made up crap to make everyone think that it's the internet usage causing the problem.'
    I'm inclined to agree with the comment about the number putting the internet users outside the 'Kiwi share' agreement. Very sneaky.
  • Internet useage is up, sure.
    but at the same time voice messages are decreasing (my guess), because of e-mail, icq and others i for one, and many flatmates and friends don't make many voice calls (besides ordering pizza :P). calls that we would usually make if we didn't have the net to talk with.

    so their complaints about the possibilities of overloading (which are always possible under dire circumstances) are stupid. and doubly stupid a week after their own flat rate which will increase the useage.

    altho, it at least we shouldn't have to worry too much about being kicked off because of overloading

    i think i'm just gonna wait and see...
  • This is how it looks to me..

    1. Telecom [telecom.co.nz] introduced a flat rate [xtra.co.nz] to its ISP, Xtra [xtra.co.nz] . As a means of killing off the rest of the ISP's that have had flat rates for years. eg, iHUG [ihug.co.nz], Sinesurf [sinesurf.co.nz] etc..

    2. They then complain that their exchanges are overloaded with all the extra traffic all the other ISP's are causing. Given that they are the largest ISP in the country. They shoot themselves in the foot by going flat rate. And now they want a way to make money out of it.

    Pretty straight forward to me.. Although there's more to it than that. And this article in the New Zealand Herald [herald.co.nz] is worth a read if you're intrested: Telecom spurs Internet rage [herald.co.nz].

  • by Anonymous Coward
    1. Wrong - it is so Telecom can get out of paying the two Telcos (Clear and Saturn) the Interconnect revenue that is currently costing them at somewhere between $25 and $50 Million a year.

    In a nutshell, with a call from Clear or Saturn to Telecom, Clear or Saturn pay a small per minute charge. A call from Telecom to Clear or Saturn, then Telecom pays a small minute charge) - With NZ ISP's like IHUG and Paradise Net not using Telecom numbers, THAT is the real reason they have said all ISP's have to use these 0867 numbers, the 0867 numbers fall outside the number ranges specified in the interconnect agreements, Telecom sidesteps having to pay the interconnect revenue.

    All the other reasons are just plain bull, the 0.02c is to make people want to use a 0867 number.
    2. Wrong again, when dialling to anyway in 99% of New Zealand and practically all ISPs your call is only analog until it gets to the mux at the end of the exchange, from then on its digital, all the way to the ISP in most cases (which it has to be to get 56k modem speeds).
    3. Still wrong - IPNET is not the same as this 0867 access, 0867 access is just diverted to the same old number local number, depending on where you call from though it diverts to the relevant local number. It still terminates on the ISP's own NASes. Telecom's IPNET is actually more expensive because they basically just provide you the data, they provide the lines and the modems, and then throw a surcharge on depending on how many ports you take.
    4. As I read it, Paradise.net only offers IPNET access for customers that do not reside in the main centres where they have local numbers.
    5. Once again, the 'local' 0867 number is only there for telecom to avoid paying interconnect revenue - no other reason, if an exchange is running low on capacity, Telecom can just as easily drop a couple of E1's (30 lines each) of calls going to an ISP just like that.



    What everyone should rightfully be up in arms about is the fact that Telecom has turned a local call to specific destinations (namely to the ISP's) and said they are going to charge for those calls. They think that by providing an alternative (that meets there own ends) people won't be worried about it, as the only people that suffer is the other Telcos who have been making money on that interconnect. It does set a very scary precedent that we should all avoid - if Telecom signed a interconnect agreement that does not work for them, its there own fault for not thinking about extremely long calls - what they are doing to avoid it is really bad.

    I don't work for Telecom Clear or Saturn but have worked in the industry for many years.
  • Anyhow, shouldn't it be more effective for an exchange to give calls to one particular number (111 in NZ) higher priority, rather than drop the priority of a different class of calls?
    But that would make sence, not cents. (excuse the poor attempt at humor)


  • I don't think Telecom want to restrict net access; they just want their ISP, Xtra, to become the dominant ISP, and the easiest way of acheiving that is to force all the other ISPs out of the market via net taxes and predatory pricing. (If you read this you'll see that Telecom's ISP, Xtra, is exempt from the charges).


    To say they are 'exempt' is mis-leading. They use another special number (0873) which is 'IPNet' a service that allows ISPs to make use of 'communial' modem pools the traffic is then routed through that ISP's network.

    The thing is however that there is no effective way for ISPs to control access to these lines (kicks are near impossible) -Meaning that people can multi-login with one login and password on a flat-rate account. making them ineffective for providing nationwide access.

    However it is understood that Telecom allows their ISP Xtra to have calls to that IPNet number to be routed to local modem pools. This is not a service that is available to other ISPs - If they wanted to play on the same field as Xtra they would have to base themselves entirely on IPNet, then they are at Telecom's mercy when it comes to expansion of service. Some ISPs make extensive use of this in areas they can't offer a local numbers, but it has a reputation of being hard to connect to.


    It's basically _way_ unfair competition... there are a number of issues like this in the NZ telecommunications industry at the moment, and a major problem is that the Minister of Communications and the Commerce Commission are completely ball-less and won't doing anything to keep Telecom in check.


    When a company (in New Zealand) is paying in excess of NZ$400 million a year in taxes you can understand the government's reluctance to get nasty.

    The (in my opinion) biggest motivating factor in this move is to avoid interconnection fees. Currently Telecom is paying other local carriers a per minute fee for calls that originate on Telecom's network (about 99% of residental lines) and terminate on other carriers network. However for other carriers to offer the 'Internet Numbers' to their ISP customers they will likely not be able to charge those interconnect fees. That is a loss to those carriers of millions of dollars a month, however if they don't accept it then anyone calling ISPs on their network will be subject to the 'Telecom Net Tax'.

    The ironic part is the fact that Telecom's ISP, Xtra recently moved (as in 2 weeks ago) from a time-based charging system to flat-rate, so "New Zealanders could spend more time online," only to turn around a week and a half later and blame Net usage on the problems with it's network.

    That's all.
  • Posted by Vik Olliver (at home):

    I want to run a free community bulletin board in NZ. Unfortunately, Telecom won't give little old me a free magic number, so the local community have to pay for calling a local community bulletin board. This is against the Kiwi Share agreement.

    It's just plain wrong. If I were paranoid I'd say that Telecom want to discourage the creation of independent data networks, people communitcating direct, and small-time ISPs in general.

    Vik :v)
  • 1. The blackouts were in Auckland, the largest city. Wellington is the capital.

    2. We have not have had a frenzy of tax cutting. It's election year, so govt is talking about it for fairly obvious reasons :)

    3. AFAIK we're being bought by the yanks, not the Australians.
  • by Barbarian ( 9467 )
    NZ is in pretty bad shape. They had periods where there were rotating blackouts in the capital, where these rotating blackouts lasted for month.

    A few years back they had a frenzy of tax cutting to stimulate the economy. Now many things in NZ are owned by Australian companies.

    A taste of things to come for North America?
  • Man I wish I has a room temperature IQ!!

    We're talking Kelvin, right?

  • Just curious if your running a free bulletin board, how does the NZ government find out that your running it? do you have to report this kinda thing? What happends to you when you don't?
  • In the UK, local daytime calls are 4p ($0.064 approx) a minute, 1.5p ($0.024) after 6pm and 1p ($0.016) at weekends. There's also a minimum charge of 5p ($0.08) on every call, so if your modem doesn't connect, tough luck.

    Luckily I'm at university at the moment, so I'm not affected, but my last exam is on Tuesday...

    My pockets feel lighter already :/
  • As a NZer who was in living in Canada at the time that GST was implemented, I spent a period laughing hysterically at the farce the Canadians made of GST (which New Zealand had gotten some years earlier).

    New Zealand's GST (currently at 12.5%) is charged on absolutely everything (although companies can claim it back). Prices listed on shop shelves include tax on the ticket (this seems to be for everything except computers and computer components, go figure). New Zealand's initial GST introduction (at 10%) was timed to coincide with the removal of a manufacturing tax, prices were supposed to stay the same.

    Canada's GST, on the other hand is either 7% or 8% (I forget which, one was GST, the other was Provincial). There are exceptions on all sorts of things, only half of which seem to make sense (Children's clothing and certain food products, for examples, are GST free. A weird twist of nature mad 5 donuts include tax, but made 6 tax free. 6 donuts were cheaper than 5......). dry cleaning companies suddenly started selling expensive potatoes, with dry cleaning as a free service (and thus avoid tax).

    This phone tax, however, is not government run. It is an ex-state company abusing it's monopoly presence (Telecom are the only local dial-tone supplier for most of the country). The government would have had more tact (especially as this is an election year).

    Also, Telecom's management have just changed their chairs around. This is really a case of a new boy trying to make an impact.

  • and it'll be interesting to see what happens when this issue comes up in other countries.

    Current fee structures for local calls, and current use leves of local telco networks, are designed for people making 20 min calls to Aunt Maude. As more and more people use their local service to make 1-2 hour calls to their ISP every night, somewhere, someone's fees are going to have to rise. And it seems to me its potentially reasonable to single out data calls for special fees, not because of the content, but because people tie up phone lines longer (typically) with data connections.

    I guess in markets that already charge for local calls, this isn't such a big deal. In markets where that's not the case, though, either people will have to pay for all local calls, which may not be politically feasible, or data calls will have to pay extra fees.

  • There are a couple of reasons, why I think you are right. First of all I believe consumers will not suffer in any way, **PROVIDED** Telecom does not change the terms it just proposed:
    1. they will NOT disconnect you while you are on
    2. there will be no prioritization which could not be done even without the new prefix, because emergency calls already have the ability to kick out other calls to get through (so on that point they are already trying to bullshit the people), and Telecom could as easily prioritize the existing ISP number as it could the new one (just makes it a bit easier for them)
    3. AFAIK, there are no lower quality lines they could route data calls through, they don't have some old shoddy lines they could use for data, it is all the same stuff
    4. service could be degraded if they route you with lots of detours, BUT that makes it only more expensive for them, so no danger here

    So with no harm to internet users that I can see, your explanation is the only thing that makes sense to me.

    -- I don't work for Telecom either, in fact I don't work for anybody but myself! ;)
  • For those of you outside New Zealand who are looking at this, a bit of background might be in order to see what the outrage is about.

    In 1990, the Governemnt sold Telecom for NZ$4.25 billion to a mostly American Consortium. They didn't just sell the service - they actually sold the whole network.

    As a condition of sale, the Government retained a "Kiwi Share" in Telecom which placed certain obligations on the corporation. These were (interestingly enough, a brief search on www.telecom.co.nz didn't find this info, so I had to look elsewhere):

    1.That the purchasers would sell down a portion of the initial holding to the New Zealand public,

    2.That there would be a 49.9% ceiling on the shareholding of any foreign buyer,

    3.That the Board would comprise at least 50% New Zealand citizens,

    4.That Telecom would maintain a comprehensive residential phone network, with free local calls and increases in the line rental limited to the rate of inflation,

    5.That the line rental for rural residential phones would be no more than for urban ones.

    I could go into a whole lot of stuff about how the government had promised that they wouldn't sell Telecom, and how it was underpriced, but there is some more info I found here:

    http://www.plain.co.nz/bohica/tele_2.HTM

    Anyway, Telecom since then has been trying to work its way around some of this. Telecom executives frequently complain how much the rural and free local calling services are costing it. A while ago it introduced a 'plan' where by paying for local calls, you had a lower monthly rental. I _hope_ that this isn't the prelude to trying to get us all onto local charging.

    Telecom has also been making very large profits, so it has had ample opportunity to upgrade its netwrok if this was going to be a problem.

    So the question is not really about the pros and cons of charging people who make massive use of phone lines (I could see some case being made for this) - it is about meeting obligations which it is quite capable of meeting.

    Roy Ward.
  • Another thing which is truly sickening is the fact that the government ever sold off the company in the first place. Hundreds of people have lost their jobs since, and Telecom are making larger profits each year - and yet they continue to find ways to screw the customers over.

    The lines and equipment that is now owned by Telecom were paid for by the tax payers (by way of the government) and then almost GIVEN to Telecom. It's not as if they've had any hard work setting up the damn company, it was pre-existing and ready to run when they bought it.

    This is not the first, and certainly not the last thing that Telecom will do. I can remember when I was using an ISP which was just getting running, around the same time as Xtra (Telecom's own ISP) was getting into the business... The ISP I was with had no end of problems with their connections and had to wait days, sometimes weeks to get the problems solved by Telecom technicians.
  • Why exactly are you connected for 20 hours a day? Sure, if it is free you can just leave it connected, but do you actually USE that much time? I figure that you atleast sleep and eat, that would be 7-10 hours a day right there. Sometimes I leave my connection open for a day or two when I'm downloading something large, but it doesn't stay open all day every day of the month.

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