Bid to switch networks seems headed for court

By CHRIS BARTON, IT editor

The dispute between Telecom and WorldxChange looks unlikely to be resolved soon and may escalate towards a court injunction.

After Telecom refused to switch WorldxChange's toll bypass phonecalls to Clear's network, WorldxChange complained to the Commerce Commission on Friday June 1 accusing Telecom of abusing its market power.

It claims Telecom is delaying the changeover because it does not want to lose termination payments of nearly $6 million annually for carrying WorldxChange's traffic.

WorldxChange wants to use Clear for cost savings that it says it will pass on to customers. Clear can offer a cheaper price because it has a better interconnection agreement with Telecom.

"It looks to us as though Telecom is refusing to supply services," says Clear spokesman Kevin Millar.

"We're not happy with the situation."

Telecom says it will not switch WorldxChange because the request falls outside their agreement.

Telecom spokesman Simon Moutter says the issues raised by WorldxChange came as surprise. But WorldxChange says there had been more than a month of communication between the three parties have been addressing the matter for a month.

"The interconnect agreement with Telecom is not the issue," says Paul Clarkin, of WorldxChange. "I've got agreements like that with all the carriers. It doesn't mean I have to use it to originate our traffic."

The statements have a familiar tone - heard early last year, just before Clear stepped into a High Court injunction hearing to stop Telecom from disconnecting free internet provider i4free.

Though i4free won that injunction, allowing routing of its traffic to Clear, the full case - now joined with a Commerce Commission case in the High Court at Wellington - is still to be heard.

It's such grindingly slow wheels of justice that are driving many in the telecommunications industry to despair.nte

Malcolm Dick, of telecommunications company CallPlus, says it would take a few keystrokes for Telecom to change over WorldxChange.

"It happened within a week when Newcall wanted it. In a deregulated telecommunications market Telecom should have an absolute obligation to switch customers when they ask."

Mr Dick knows Telecom's hardball tactics well. As a part-owner of the now-defunct i4free, Mr Dick is seeking about $20 million in damages from Telecom.

Until the new Telecommunications Act is passed - scheduled for the ned of September - the courts are the only place to seek rulings on disputes. Even the Commission must use the courts to enforce the findings of its investigations, if it's unable to reach a negotiated settlement or the company concerned ignores its warnings.

That's due to change with the new Act, which will appoint a Telecommunications Commissioner empowered to make binding rulings on disputes.

"If the companies can't sort it out then the Commissioner will," said Minister of telecommunications Paul Swain.

Mr Swain said the legislation was designed primarily as disputes resolution process aimed at getting quick decisions. As well as making rulings on "designated services" such as interconnect agreements, the commisioner will also be able to advise cabinet on what else should be designated. Such ammendments to the regulations - involving for example non-code access or switching services to another carrier - would follow an "order in council" process which the minsiter said would happen quickly.

But until then, the industry continues to operate in a regulation-free zone where the incumbent telco can unilaterally call many of the shots.

"There's no possible reason for Telecom not to do as we've asked, other then to stop us competing," said Mr Clarkin.

He says another reason Telecom is blocking the arrangement with Clear is to stop customers getting cheaper land to mobile calls. Clear has a deal with Telecom for "non-code access" beginning in August which WorldxChange could piggyback on. As well as the ability to make calls without dialling an access code first, the deal enables both Clear and WorldxChange to offer rates significantly below the current retail average of 63c per minute.

Mr Moutter said if WorldxChange wants its customers to use Clear, it could use one of the access codes Clear has assigned to WorldxChange and ask Telecom to provide non-code access.

Mr Clarkin said the method was cumbersome, expensive and would unfairly disadvantage WorldxChange's 27,500 code access customers who would all have to be notified to dial a different number.

Telecom spokesman Andrew Bristol said it made a similar changeover for Newcall customers because the company was exiting the New Zealand market. He said another changeover made for internet provider Zip was different because it didn't have an interconnect agreement.