Telecom chief swipes at internet 'freeloaders'

By RICHARD BRADDELL

WELLINGTON - Telecom chief executive Theresa Gattung has accused Clear Communications and free internet service provider i4free of being freeloaders, by gouging interconnection payments from Telecom for calls to their services.

"No business, big or small can survive if it lets freeloaders take, take, take and never give," Ms Gattung said in a speech to the Wellington Chamber of Commerce.

Other free internet service providers relied on selling advertising or selling marketing information to other businesses, she said.

"It's a difficult model to sustain, but good luck to them, they are entitled to have a try.

"But that is not the business model that i4free have been following. We believe that i4free makes its money by simply receiving a share of the interconnect revenue between Clear and Telecom. That is, the more data we carry, the more money they get paid."

On the launch of its Zfree free internet service this week, Clear said on its own Clear Net website that it stood to earn millions of dollars in interconnection revenue from Telecom if the service succeeded.

Under the local interconnection agreement between the companies, Telecom has to pay 2c a minute for calls including internet calls delivered to Clear's network. (Clear pays 3c in the other direction).

Ms Gattung said the average connection time for customers to its own internet provider, Xtra, was 19 minutes. But the way i4free was structured, everybody could make a local call from their computer and download streaming video 24 hours a day, seven days a week, without paying a cent.

"Interconnect agreements are all about making sure that everybody contributes to maintaining the shared network and that they behave reasonably," she said.

While there would be arguments about what was fair, she said the 0867 internet access number had been essential in actively managing internet traffic, so that spikes in demand would not put the network at risk.

"All I want to do is let you know that there are two sides to every argument, even if the media doesn't always want you to think so."

Commenting on Ms Gattung's speech, Clear spokesman Ross Inglis said that if Telecom felt so threatened, it should start its own free internet service.

"Worldwide, these services are funded by innovative commercial models based on advertising revenues, e-commerce and interconnect revenue sharing," he said.

The demand for free internet was demonstrated by the 9000 people who had signed up for Zfree since Tuesday's launch.

Ms Gattung said that Xtra's customer base had gone from 180,000 to 270,000 in the past year and total time online had jumped from 90 million minutes in March last year to 270 million.

In a reference in the speech to another call pricing issue, she admitted that her company had mishandled Saturn's entry to the Kapiti market.

"We handled calling prices from Kapiti to Wellington badly, and gave Jack Matthews and his team a great leg up in the process."