New service, new row

By CHRIS BARTON

The launch of the i4free free internet service has put Telecom's controversial 0867 internet access code back in the spotlight, sparking new claims of anti-competitive behaviour.

The Commerce Commission has been investigating 0867 access since Telecom introduced it in September, but has not made a ruling.

Internet service providers and Clear Communications have protested about the 0867 access, and the Crown Law Office has said Telecom's 2c a minute charges to internet users who do not change to 0876 numbers are "likely" to breach the Kiwi Share provisions guaranteeing free local calls.

Commission spokesman Vince Cholewa said a ruling was still a month away, citing the "complexity of telecommunications issues" involving Section 36 of the Commerce Act which prohibits use of a dominant position for anti-competitive purposes.

I4free's launch today was threatened by the dispute over the 0867 access.

CallPlus director Malcolm Dick, one of the investors in i4free, said Telecom threatened to disconnect its 0867 numbers just as the service was about to start.

Mr Dick says i4free's use of number porting to terminate internet calls on Clear's network does not breach Telecom's 0867 terms and conditions.

"Our 0867 number is mapped to a Telecom number and diverted to Clear's network under the number portability agreement it has with Telecom," he said.

"Clear competed with Telecom for our local access business and we chose Clear."

An exchange of lawyers' letters and the preparation of affidavits relating to alleged threats by Telecom account managers to cut off i4free's lines has lead to an anxious standoff.

Telecom sales manager Alan Mitford-Taylor said that while diverting calls was technically possible, the absence of an agreement with Clear on 0867 numbers meant anyone doing it was breaching its terms and conditions.

He said Telecom would "take steps" against internet providers using number portability to bypass 0867.

Asked if that would include Compass Communications' freenet, which has a mix of Clear and Telecom lines for its 13,700 subscribers, Mr Mitford-Taylor said he could not comment on specific cases.

A key factor in the 0867 debate is the $12 million a year in interconnect revenue that Clear was collecting on internet calls terminated in its network.

Nearly all providers have now switched to 0867, so that revenue has dried up.

But Clear communication manager Ross Inglis said some ISPs were now using the Clear network with number porting, resulting in a return of some income.

"Telecom unilaterally announced this type of traffic was outside the interconnect agreement," he said. "Our view is that it's local calling."

Clear has rejected 0867 for its own internet service, Clearnet, opting to pay Telecom's 2c a minute charge while it waits for the Government to act. Mr Inglis said that at the end of February it had paid $1 million in credits to Clearnet customers.

Telecom claims it introduced 0867 so it could better manage the routing of internet calls that were threatening to clog its network.

In a letter to CallPlus, Mr Mitford-Taylor says using number porting "defeats those efficiencies by adding extra switching steps and, thus unnecessary network costs."


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