Pact signals end for interconnection war

By RICHARD BRADDELL

Interconnection and Kiwi share payments will become things of the past under a watershed set of agreements between Telecom and Telstra Saturn that could become the model for industry relationships.

The pact, signed yesterday afternoon, will be influential in interconnection negotiations between Telecom and Clear.

Under an April truce between these two old foes this agreement must be concluded by the end of August.

If applied to the rest of the industry, the removal of interconnection payments would end a source of bitterness among new entrants who have resented the heavy weighting of payments in Telecom's favour.

In what Telecom and Telstra Saturn described as a comprehensive agreement, interconnection payments will no longer be made so long as calls between the two networks are in broad symmetry.

However "call sinks", such as 0900 calls which can result in traffic largely in one direction, will be excluded.

The landmark deal also provides for wholesaling of either companies' services to each other, a pole sharing agreement and the settlement of rebilling litigation that blew up between Telecom and Telstra two years ago.

In a key term, Telecom has agreed to forward electronic billing information to Telstra Saturn when the latter has authority to act as an agent for Telecom customers.

Because of the wholesaling and electronic billing arrangements, Telstra Saturn chief executive Jack Matthews said there was no longer any point to ugly litigation that would have taken years and been bad for the industry and customers.

Telecom's chief executive, Theresa Gattung said the arrangements were fair and created a sustainable relationship, a view which was echoed by Mr Matthews.

The agreements also contain streamlined dispute resolution processes based on the new Arbitration Act, which follows international standards for dispute resolution.

The spur to the agreement appears to have been Telecom's unilateral imposition of 0867 internet access which prompted Saturn to enter discussions in August last year about its internet arrangements with Telecom.

A heads of agreement, under which internet traffic was zero rated between the two companies, led to the more comprehensive agreement.

While 0867 was supposedly about managing internet traffic between networks, Telecom's view that 0867 access was separate from interconnection agreements had the effect of depriving Saturn and Clear Communications of interconnection revenue.

Mr Matthews said yesterday that the unilateral introduction of 0867 raised questions about the integrity of interconnection agreements, although he accepted that Telecom had correctly identified the distortions to interconnection arrangements created by the internet.

"Our goal has always been to solve the issue, not in the instance of trying each individual problem as it came up, but more fundamentally to try to resolve it through a more balanced and realistic interconnection agreement and associated agreements that dealt with it on global terms."