Telecom is to pay $31.6 million to competitors Vodafone, Orcon, CallPlus, Compass and Airnet in a settlement reached today with the Commerce Commission.

The settlement relates to legal proceedings undertaken by the Commerce Commission in May, relating to the company’s obligations under the Telecom Separation Undertakings, put in place in 2008.

Specifically, the Commerce Commission says Telecom discriminated against its competitors by failing to provide them with Unbundled Bitstream Access (UBA) in conjunction with the Sub-Loop Extension Service (SLES), while providing an equivalent service to its own retail business.

This gave Telecom a significant commercial advantage, the Commerce Commission says.

Telecommunications commissioner Ross Patterson says the settlement represents the return of Telecom’s commercial gain.

"This will enable these companies to invest further in local loop unbundling,” Patterson says, "and provide competitive services to consumers.”

While Telecom does not accept that it breached the Undertakings, CEO Paul Reynolds says it was important to settle the issue prior to the company’s demerger from network arm, Chorus.

"Settlement with the Commission and industry will allow all parties to move forward as we transition to the new regulatory environment and a new industry structure,” Reynolds says.

"We do acknowledge that Telecom failed to meet expectations that a UBA service would be provided with SLES in a timely manner.

"We are now in the process of rolling out a UBA service to work with access seeker voice.”

The settlement amount will be apportioned between the relevant companies by the Commerce Commission.