Telecom NZ coughs up USD25m to placate rivals

17 Oct 2011

New Zealand’s Commerce Commission (ComCom) has confirmed that it has reached an NZD31.6 million (USD25.4 million) settlement with Telecom New Zealand over alleged discrimination under the Telecom Separation Undertakings that form a key part of the Telecommunications Act. According to the New Zealand Business Review, although the penalty surpasses previous records, the figure stipulated is far less than Telecom’s rivals wanted; CallPlus and Kordia had claimed NZD65 million and NZD74 million respectively. ComCom says that the settlement follows its May 2011 decision to instigate legal proceedings against Telecom for discriminating against other telecoms firms by failing to provide them with unbundled bitstream access (UBA) in conjunction with sub-loop extension services (SLES); the misdemeanours allegedly occurred when Telecom was providing an equivalent service to its own retail business. ComCom judged that Telecom’s failure to provide the service to its rivals not only seriously imbalanced competition within the sector, but also resulted in significant commercial gain to Telecom.

Confirming the news, telecommunications commissioner Dr Ross Patterson commented: ‘The NZD31.6 million settlement means that Telecom has returned its commercial gain through the compensation it has agreed to pay to telecommunications companies Vodafone, Orcon, CallPlus, Compass and Airnet. This will enable these companies to invest further in local loop unbundling (LLU) and provide competitive services to consumers. We are pleased that Telecom has worked constructively with the Commission to reach a settlement which has avoided lengthy and expensive litigation, and resolved the matter prior to structural separation coming into effect’. Meanwhile, Telecom chief executive Paul Reynolds commented: ‘It is in everyone’s interests that we settle this regulatory issue prior to demerger’, noting that it was in the telco’s interest to ensure that ‘any legal action with the Commission that may have arisen from the investigation is not passed to either ‘New Telecom’ or ‘New Chorus’ in the event of a demerger’.

New Zealand, CallPlus, Chorus (New Zealand), Kordia, Spark