Cheap, fast net deal on hold

Telecom has moved against a Commerce Commission proposal that seeks to lower the cost and raise the speed of internet offerings.

The company yesterday applied in the High Court at Wellington for a judicial review of the commission's draft regulation on TelstraClear's request for better high-speed internet wholesale terms.

Telecom took issue with the commission's proposed wholesale pricing, which would set its per-user charge to TelstraClear at $26.57 regardless of what speed service the user is getting. The company charges its wholesale customers, such as Slingshot and Orcon, differently depending on the speed of services they are reselling to their users.

Telecom also objects to a proposed term that would disallow it from charging TelstraClear different fees for residential and business customers, as it does with other service providers. Telecom said the pricing principle was unlawful.

"We believe that the process the commission has applied to arrive at this pricing is not in line with the requirements of the [Telecommunications] Act," said Telecom spokesman John Goulter.

TelstraClear applied for better terms in November 2004 and does not resell Telecom's broadband service.

Spokesman Mathew Bolland said the legal action was an attempt by Telecom to keep TelstraClear out of the market even longer.

"The only thing Telecom is serious about is holding on to market power. This should be all the evidence the Government needs to take the promised action to open the market," he said.

The commission's proposed regulation, issued last month, would also force Telecom to offer its wholesalers much faster internet services.

While the regulation would initially apply only to TelstraClear, other ISPs believed they would be able to piggy-back on the precedent and get similar, if not better, terms. The expected result was an increase in product differentiation and thus competition, which would have led to lower prices and faster speeds.

Goulter said Telecom hoped the review would be concluded by the end of the year, "So that we and the industry as a whole know exactly where we stand and we can get on with things".

Industry players had hoped for a final ruling by the commission by the end of the year, but said the legal challenge would delay that.

"Telecom has successfully slowed the process down even further," said David Diprose, president of the Internet Service Providers Association and general manager of regulatory affairs for iHug. "It's time for the Government to step up to the fight and say, no, Telecom does not rule the world."

The commission could not be reached for comment.