Orcon will pull out of the Telecommunications Disputes Resolution Scheme, established in 2007 to settle disputes with consumers.
Chief executive Scott Bartlett says he has written to the scheme's chairman to say Orcon would withdraw "temporarily".
Smaller telecommunications companies were paying a disproportionate share of the costs of the scheme, he says.
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Orcon was also frustrated that consumers were contacting the scheme administrators, Dispute Resolution Services, before they had raised queries or complaints directly with Orcon, with Orcon then being billed by the company for passing on those messages.
Orcon's move has surprised industry observers, given it is part of a state-owned enterprise and the scheme has been seen as having the support of the government.
But Bartlett says Orcon was likely to rejoin immediately if its complaints were resolved. He had no issue with any rulings that had been handed down under the scheme. Indeed, Orcon has not been subject to any decisions, he says.
The disputes resolution scheme was set up with the encouragement of former Labour communications minister David Cunliffe to deal with complaints from phone and internet users that frequently landed on the desks of ministers, and as an alternative to regulation.
Under the scheme, which is free to consumers, people can take disputes to specially trained adjudicators if they fail to resolve matters first with their telco.
The adjudicators can order telcos to pay customers compensation of up to $12,000 if they are found to be in breach of a customer complaints code drafted by the Telecommunications Carriers Forum, an industry body.
Telecom, Vodafone and TelstraClear are all bound by the scheme.
Forum chief executive David Stone says he is disappointed Orcon has withdrawn, but does not believe it will have a big effect on the scheme's operation.
"Like most things in life" the disputes scheme could probably be improved, he says.
But it was about to be reviewed and how costs were apportioned was one of the issues that may be considered. "It is unfortunate they have chosen to leave at this stage," Stone says.
Bartlett says the review has been under way for a year and while Orcon wanted to be part of the scheme, it decided enough was enough. "I hope this serves as a bit of a wake-up call ... to get this review completed."