Telecom could face million-dollar claims from ISPs

Commerce Commission determination may give rise to claims

Telecom could be hit with compensation claims from providers, after the Commerce Commission clarified that Telecom Wholesale couldn’t charge access seekers different rates for its sub-loop extension service (SLES) and unbundled bitstream access (UBA) than it does for its retail division.

According to an industry source, local loop unbundling pioneer Orcon claims it has lost in the region of 250,000 customers due to Telecom Wholesale’s charging regime, making it impossible to come up with a viable business case to unbundle cabinets.

The price difference was $15 a month per customer in cabinetised areas, with the possible compensation claims being effective from the date of Telecom’s equivalence of inputs undertakings that were given about a year ago.

This could put the compensation claims per provider in the tens of millions of dollars, if accepted.

Scott Bartlett, chief executive of Orcon, says “the damage done to our business since cabinetisation begun is extensive”. He adds that Orcon is pleased that the Commission has delivered its SLU/SLES decision in the provider’s favour, but didn’t want to provide further detail as to whether or not compensation will be sought from Telecom.

Callplus chief executive Mark Callander says, “this is a key issue for all access seekers that have built LLU networks”.

According to Callander, the SLES/UBA issue, “has certainly impacted investment decisions” and has had a “significant impact” on the provider’s business.

However, Callander declined to say if Callplus intends to seek compensation from Telecom and quantify any losses the provider might have suffered due to the SLES/UBA charging.

The Commerce Commission has commenced an investigation into whether or not the SLES/UBA pricing difference for access seekers and Telecom Retail, amounts to a breach of the incumbents legally binding operational separation undertakings it gave to the government.

A Commission spokesperson says it is too early in the investigation for it to be appropriate to talk about possible compensation.

“The Commission has not yet formed a view about whether the Operation Separation Undertakings may have been breached, and if so, what type of enforcement action may be appropriate.”

However, the spokesperson adds there are several independent actions available to parties, if they feel they have been harmed by Telecom’s actions.

The Enforcement provisions contained in Part 4A of the Telecommunications Act and the UBA Standard Terms Determination and the Undertakings all constitute “enforceable matters” under subpart 2A of s156N of the Telecommunications Act, the spokesperson says.

Parties may enforce both the UBA STD and the Undertakings, including the non-discrimination provisions that are the subject of the on-going investigation under s156P of the Telco Act, by filing a prescribed form in the Wellington Registry of the High Court, the spokesperson says.

Furthermore, parties also have the option of filing complaints with the Commission under s156O of the Telecommunications Act.

The Commission may after receipt of such a complaint, join with the complainant to take action under s156P.

In addition, Commission standard terms determinations set out grounds for dispute resolution processes, the spokesperson says.

Telecom’s corporate communications manager Ian Bonnar would not comment on the possibility of the providers seeking compensation, saying only that “as an investigation is underway, we don’t have anything more to say on it at this stage”.

Computerworld approached the Independent Oversight Group in charge of monitoring and reporting on Telecom’s compliance with its undertakings to the government, for comment on the Commerce Commission investigation, but received no response before going to print.

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