Hardball on Net but is it cricket?

By Richard Bradell

Between the lines

Is the new charge Telecom announced yesterday another case of it playing hardball, or just a sensible solution to managing the growing burden of Internet traffic?

The answer is both.

On one level, Telecom's move to manage Internet traffic to help keep its voice network secure makes a lot of sense. Putting aside questions about whether it has been investing adequately in its exchange switches, the fact remains that everyone, from customers to other carriers, has a vested interest in seeing that its network is optimised so the voice traffic it was built to carry is not jeopardised by heavy Internet traffic.

But the execution of its new Internet traffic arrangements is nothing short of high-handed. Portrayed by Telecom as a win-win for everybody it is anything but. Internet service providers (ISPs) with the exception of Telecom's Xtra service will be severely inconvenienced. They will have to change their marketing and support arrangements, while their customers will have to reprogram their computers.

Telecom will be exempt because its own provider, Xtra, operates from its IPNet and is thus unaffected. There will be other exceptions such as some of the Saturn customers in Wellington who use ISPs based on Saturn's network. But they will be small in number.

For the carriers, the conclusion is unavoidable that Telecom has sprung this arrangement without consultation in order to side-step an unfavourable term in its interconnection agreements.

Indeed, Telecom's chief executive, Dr Roderick Deane, has made no secret of the fact that he finds it irksome to pay Clear for completing calls to Clear Net. He recently told the Business Herald that the next round of interconnections would see such an anomaly disappear.

But Telecom's move to pre-empt the interconnection process must be seen in the context of a swarm of disputes that have embroiled even the most pragmatic of carriers, Telstra, this year.

A ruling for an interim injunction on Telecom's cancellation (again unilateral) of re-billing arrangements with Telstra is due any day. Meanwhile Commerce Minister Max Bradford is considering a veritable litany of complaints about Telecom delivered last month by a group of carriers including Telstra.

But even in an industry as querulous as telecommunications, the number of disputes this year is remarkable. They could be put down to the sharp increase in competitive pressures. Or to a reappraisal of interconnection arrangements by Richard Dammery since Telecom appointed him interconnections manager last September.

Then again, change is looming in a regulatory environment that for a long time has seemed to be weighted in Telecom's favour.

Is Telecom trying to cement its position before the rules change, or is this just a final burst of ill humour?