Telecom NZ risks another million dollar fine

New Zealand's telco regulator has confirmed an investigation into an alleged breach of the legally binding Separation Undertakings agreed to by market incumbent Telecom New Zealand.

The NZ Commerce Commission has reported that it would look into whether Telecom Wholesale has discriminated against other telcos in favour of the incumbent’s retail arm.

Should Telecom be found guilty, the Commerce Commission could ask the High Court to impose penalties. These could be substantial - up to NZ$10 million for any breach - and with an additional half a million dollars a day if the company continues to breach after the High Court has decided to impose penalties.

Furthermore, Telecom could be ordered to pay damages to access seekers or face injunctions that restrain it from behaviour that breaches the undertakings.

At the heart of the issue is the allegation that Telecom Wholesale has been charging telco and ISP access seekers twice for telephone service or POTS, once through the copper sub-loop extension service (SLES) to the exchange, and again through the data unbundled bitstream access (UBA) component with a so-called 'uplift cost'.

Telecom Retail however has not had to pay the UBA uplift cost, understood to be $15 a month.

Yesterday, the Commerce Commission issued a clarification on its standard terms determinations on Telecom’s UBA, after competitors Callplus, Kordia, Orcon and Vodafone wrote to the regulator in January this year to lodge official compliants.

The telcos claimed that for them to buy SLES and sub-loop unbundled service (SLU) from Telecom’s infrastructure division Chorus, they had effectively already paid for the cost of the copper line.

In its clarification, the Commission agreed with the complaint, and said no uplift charge for UBA should be payable for access seekers that purchase SLES and SLU - as Telecom had already recovered the copper price in the cost for the latter two services.

Mark Watts, Telecom’s head of external media and corporate relations, disputed the allegation that telco has been discriminating against access seekers. Watts added that Telecom will participate in the Commerce Commission’s investigation, but would not comment further in detail.

In July this year, Telecom dodged going to court by paying NZ$1.6 million to Orcon and Vodafone over a loyalty offer that was deemed discriminatory by the Commission and the telco’s own Oversight Group that monitors compliance with its undertakings.

The latest case is thought by industry commentators to damage Telecom’s chances of taking part in the NZ government’s Ultra Fast Broadband project.