Nothing's Clear in net access strategy

By RICHARD BRADDELL

All too often the loser, Clear Communications, has scored to the acute discomfort of Telecom.

The battle over 0867 internet access was one that Telecom might well have wanted tidily resolved late last year.

All going to plan, Clear would have said goodbye to its largest source of interconnection revenue from Telecom and the $73 million to $18 million imbalance in interconnection payments complained of by Clear would have shifted even more in Telecom's favour.

Clear did not play, even in February, when Telecom, under pressure from the new Government, offered to suspend some of the more unpalatable features of the 0867 regime and reinstate Clear's access to much of that interconnection revenue.

At a distance, it seemed that Clear may have been cutting off its nose to spite its face. But the i4free row gives the appearance of a brilliant comeback that delivers Clear the moral high ground, bolsters its interconnection revenue at least until a court hearing into the substantive case, and probably gives a useful fillip to the morale of its own staff.

But where the long-term tactical advantage lies is less obvious. Aside from the short-term revenue gain, Clear's apparent strategy is to focus the Government's telecommunications inquiry on the myriad issues that underpin the dispute, presumably in the hope of a regulatory solution.

It might work. If Communications Minister Paul Swain has sounded just a touch like his predecessor in defining the 0867 issue in terms of Kiwi Share, then there are other members in the Government who will view it in competition terms.

And so it may be no mere chance that i4free's managing director, Annette Presley, called in on Jim Anderton and not Mr Swain when she visited Wellington when the row blew up.

Time may be on Clear's side. But to drag its feet if a practical resolution is possible is a risky strategy. Clear's interconnection agreement with Telecom expires at the end of the year and any new deal should be a vastly different one that sorts out concerns about internet traffic to the benefit of all, including customers.

Getting two old foes to talk constructively, even through lawyers, may not be easy and while there is an arbitration clause, it may not produce results either side wants.

Even if the courts cement in Clear's right to internet interconnection revenue, that is a poor prize, particularly when weighed against the likelihood that competitors could be negotiating new and more reasonable interconnection arrangements, even now.

While animosity between the companies seems to be thoroughly institutionalised, there is one glimmer of hope in a new outlook that Clear's new chief executive will bring.

The British Telecom appointee has yet to be named. But he will need the negotiating skills of Henry Kissinger.