Watchdog says Telecom discriminating against rivals

The Commerce Commission is to issue proceedings alleging that Telecom is likely to have discriminated under the Telecom Separation Undertakings (the rules that govern the company's operation under the Telecommunications Act).

The watch dog is again asserting that Telecom's Wholesale division has misbehaved, giving Telecom Retail better terms than competitors like Orcon, Vodafone and TelstraClear, who are supposed to be given equal treatment.

The commission alleges Telecom failed allow competitors provide their own voice services from unbundled Telecom exchanges in conjunction with a Telecom broadband service from a roadside cabinet. Telecom offered the combined service selectively.

The commission said Telecom’s failure to provide this service to other telecommunications companies, while providing it to its own retail business, has “caused serious harm to competition in telecommunications markets, deterred efficient investment by other companies in telecommunications infrastructure, and resulted in significant commercial gain to Telecom.”

“Telecom’s failure to provide this service has reduced the financial feasibility of unbundling local exchanges, reduced the extent of unbundling, and consequently reduced the extent of retail competition,” said Dr Ross Patterson, telecommunications commissioner. 

"Unbundling" is when a competitor moves its own broadband gear into a Telecom exchange. Orcon, TelstraClear, CallPlus, Vodafone and others have taken advantage of their legal right to unbundle exchanges. Orcon, in particular, has complained that Telecom manoeuvring has delayed its progress.

CallPlus considering taking its own action
CallPlus chief executive Mark Callander said his company had requested a voice service from unbundled Telecom exchanges combined with broadband from roadside cabinets, but not received it.

Mr Callander said his company was "likely" to take a casee of its own to the High Court "to recover the considerable losses caused by Telecom’s actions.”  

The CallPlus boss added, " “It's a timely reminder to the minister that there needs to be regulation of Telecom, particularly at a time when Telecom has been announced as the major winner of the Governments UFB initiative effectively giving Chorus a copper and fibre monopoly.”

Telecom denies discrimination
Group general counsel Tristan Gilbertson said Telecom did not believe it had breached any non-discrimination obligations and would defend any proceedings.

Mr Gilbertson said his company had all the necessary functionality in place for voice services from an unbundled exchange combined with broadband from a cabinet and "expects to have a service available shortly."

History of violations
On April 19, Telecom was fined $12 million by the Hight Court in the so-called "data tails" case brought by the commission. The watchdog said Telecom had charged TelstraClear, Orcon and Ihug (now owned by Vodafone) disproportionately high prices for wholesale access to its network, preventing them from offering retail end-to-end high-speed data services on a competitive basis.