Voyager could sue Xtra

At least one of the 15 complainants who made submissions to the Commerce Commission's investigation of Telecom's Internet strategy is weighing up the option of civil action against the telco.

At least one of the 15 complainants who made submissions to the Commerce Commission's investigation of Telecom's Internet strategy is weighing up the option of civil action against the telco.

Voyager MD John O'Hara says he was " basically very pleased" with the Commerce Commission's announcement this week, in which the commission said it would take no further action over claims that Telecom was charging Xtra less for 0800 access than other ISPs, or that it was witholding the planned IPNet access network to hurt indepdendent ISPs.

"The part the commission did say it wanted to investigate further is exactly our complaint - that Xtra, a Telecom brand, is selling 0800 Internet access at $4.95 an hour, while Telecom is charging everyone $5.95 an hour simply for the 0800 component. So they're selling at a loss.

"The commission will look further into Xtra trading at a loss. Telecom made the analogy that a business like Ansett could run at a loss for five years while it established itself in the market, but it seems the commission agreed with our point that Ansett did so whilst charging the market rate. Charging market rates and losing money is acceptable - setting your prices well below the market rate to try and burn off the competition isn't."

O'Hara says his company will now consider action to recover financial damages from Telecom: "We have the option of civil action and we may seek - but whether we would do it concurrently with the Commerce Commission's investigation or wait for the result, or on our own or in conjuction with others remains to be seen."

In the meanwhile Telecom, says O'Hara, "will have to change its attitude towards customers and competitors, and, as Larry Carter of Bell South said, stop approaching them the way a rottweiler approaches a pork chop".

"I think they've got to brace themselves for this investigation - it's going to be difficult for them."

If the Commerce Commission eventually decides that Xtra is guilty of predatory pricing, Telecom is put in a difficult position. Raising its prices would be madness in a market which has come a long way down towards the sharp price point originally set by Xtra. But O'Hara points out that Xtra has just increased its registration fee from $39 to $49.

"That's a 25% hike - and I would say that it's the result of consultants going in there to try and reduce costs and improve profitability".

Join the newsletter!

Error: Please check your email address.
Show Comments
[]