The Commerce Commission has reached a $31.6 million settlement with Telecom over alleged discrimination under the Telecom Separation Undertakings.
The Commission issued legal proceedings in May, alleging that Telecom had discriminated against other telecommunications companies in breach of the Undertakings. The Commission alleged that Telecom had failed to provide the other companies with unbundled bitstream access (UBA), together with the sub-loop extension service (SLES), when Telecom was providing an equivalent service to its own retail business.
“It is in everyone’s interests that we settle this regulatory issue prior to demerger," says Telecom CEO Paul Reynolds in a statement this morning. "Settlement with the Commission and industry will allow all parties to move forward as we transition to the new regulatory environment and a new industry structure."
Telecom does not accept that it breached the Undertakings, but recognises that the Commission and some of Telecom's wholesale customers have differing views.
"We do acknowledge that Telecom failed to meet expectations that a UBA service would be provided with SLES in a timely manner. We are now in the process of rolling out a UBA service to work with access seeker voice,” says Reynolds.
The UBA/SLES service was intended to allow other telecommunications companies to provide their own voice services from their exchange-based equipment in conjunction with a Telecom broadband service from a roadside cabinet. Telecom’s failure to provide this service to other telecommunications companies, while providing it to its own retail business, "caused serious harm to competition in telecommunications markets, reduced the extent of local loop unbundling, and resulted in significant commercial gain to Telecom", according to a press release from the Commission.
“The $31.6 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," says telecommunications commissioner Ross Patterson.
"This will enable these companies to invest further in local loop unbundling 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," Patterson says.