ComCom to issue proceedings against Telecom for discrimination
Despite Telecom's big win in the government's UFB contracts, this week might turn out to be more bad than good for the telco.
Not only does it have to divest itself of Chorus to meet the requirements of the UFB contract, effectively halving its size and already resulting in a downgrading of its rating outlook from Moody's, Telecom now faces proceedings from the Commerce Commission which has alleged discriminatory practices against other telcos, causing "serious harm to competition".
In a statement today, the regulatory agency said it will issue court proceedings against Telecom for failing to provide other telecommunications service providers with unbundled bitstream (UBA) access in conjunction with the sub-loop extension service (SLES), when it provided an equivalent service to its own retail business.
The ComCom said it considers the failure to have caused serious harm to competition in telco markets, as well has having deterred efficient investment by other companies in telco infrasructure while resulting in "significant commercial gain" to Telecom.
"Telecom's failure to provide this service has reduced the financial feasibility of unbundling local exchanges, reduced the extend of unbundling, and consequently reduced the extent of retail competition," said telecommunications commissioner Dr Ross Patterson.
Non-discrimination obligations were imposed on Telecom through operational separation undertakings in accordance with a 2006 amendment to the Telecommunications Act.
If the Commission finds that Telecom has failed to comply with the separation undertakings, it may request penalties of up to $10 million for the breach, from the High Court. There may be additional penalties and damages awarded.
