Between the lines - Surf free? Not if Telecom prevails

By CHRIS BARTON

Free internet access arrived here on Saturday despite Telecom's best efforts to snuff it out. But for a few days, thanks to some clever manoeuvres, about 3000 New Zealanders experienced web nirvana - surfing for as long as they liked at no cost.

The interim injunction i4free won against Telecom in the High Court yesterday means more will enjoy the experience for at least another week. But will it last?

Not if Telecom has its way. In a display of rampant arrogance, Telecom wielded market might to disconnect i4free - not once, but three times - over the weekend.

Expect similar heavy-handed tactics in the courtroom. Past experience shows Telecom will go all the way, to the Privy Council if necessary, to defend its monopoly turf.

The case will be the biggest test yet of the Commerce Act, already shown to be severely lacking in its ability to protect consumers.

Legal argument will centre on four digits - 0867 - the access code Telecom unilaterally introduced in September for all residential internet users. Playing on public fears, Telecom claimed the move was necessary because internet calls were clogging its phone network and might even affect 111 calls.

Turns out that was not entirely true. Emergency calls have long been processed separately and can be routed to their destination via multiple paths.

But Telecom persisted, "encouraging" internet users to change by threatening them with a 2c per minute charge if they did not. In a short space of time most of the country's internet providers caved in.

Telecom's brilliant subterfuge had worked. Almost.

Clear Communications held its ground, refusing to join the 0867 regime and offering its internet customers rebates on the 2c per minute charges.

It also began offering other internet providers an 0867 bypass: obtain an 0867 number and then divert it to Clear's network using the number portability agreement it has with Telecom.

The outflanking manoeuvre i4free used made Telecom see red because it threatened to undo a real reason for 0867 - depriving Clear of the per minute interconnect revenue it gets for internet calls on its network. Not to mention that free internet also threatens Telecom's 200,000 Xtra subscribers paying $40 a month for internet access.

The Government promises legislative changes by Christmas - the earliest it says it can push through the reform necessary to rein in blatant anti-competitive behaviour in the telecommunications arena.

That leaves i4free, internet users and the nerve system of the knowledge economy at the mercy of the courts, sloppy competition law, and the massed ranks of Telecom lawyers.