Court allows Kordia to upgrade shared fibre network

11 Oct 2010

A court decision has been made public which allows state-owned New Zealand telco Kordia to proceed with unilateral upgrades to fibre-optic infrastructure built and owned jointly with domestic rival TelstraClear, a subsidiary of Australia’s Telstra. In a press release, Kordia said it initiated arbitration in 2007 to clarify its upgrade rights with TelstraClear, but a decision in favour of Kordia was not issued until June this year. Despite the ‘final and binding’ arbitration decision, TelstraClear subsequently sought permission from the High Court to appeal the decision, but was denied. Kordia is now able to upgrade its share of the fibre capacity for its wholesale business, which the company said will allow it to ‘get a similar cost base for capacity as TelstraClear, and enable [it] to compete effectively with them as well as others in the market.’ According to a report in Business Day TelstraClear, which owns more than 6,000km of fibre (second in the country behind Telecom New Zealand with more than 25,000km), struck a non-compete agreement with Kordia in 1993 as part of a deal giving Kordia a quarter share of an undisclosed portion of TelstraClear’s network. The companies began directly competing over the shared network in 2000, but Kordia has since been constrained from signing up customers because of a lack of capacity on the network, only a small percentage of which is lit. The latest ruling could clear the way for the state-run telco to raise its profile by winning new wholesale clients such as ISPs as well as large corporate customers.

New Zealand, Kordia, TelstraClear