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Telecom to pay rivals $31.6m

Telecom has agreed to pay rival telcos Vodafone, Orcon, CallPlus, Compass and Airnet $31.6 million to settle a Commerce Commission investigation into alleged overcharging for broadband services, despite denying liability.

Telecom has agreed to pay rival telcos  Vodafone, Orcon, CallPlus, Compass and Airnet $31.6 million to settle a Commerce Commission investigation into alleged overcharging for broadband services, despite denying liability.

The settlement follows a decision by the commission in May to issue legal proceedings alleging Telecom discriminated against other telecommunications companies by failing to provide them with unbundled bitstream access (UBA) in conjunction with the sub-loop extension service (SLES) when Telecom was providing an equivalent service to its own retail business.

The UBA/SLES service was intended to allow other telecommunications companies to provide their own voice services. The commission said Telecom’s failure to provide this service while providing it to its own retail business caused serious harm to competition and resulted in significant commercial gain to Telecom.

While Telecom does not accept its conduct was in breach, it acknowledges that it failed to meet expectations that it would provide a UBA service with SLES in a timely manner, and has agreed to pay compensation to its wholesale competitors.

"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.”

Under the settlement, Telecom will pay a total of $31.6 million to its competitions, to be divided among the complainants by the commission.

Dr Ross Patterson, Telecommunications Commissioner, said the settlement meant Telecom had returned its commercial gain.

Telecom is obliged under its Operational Separation Undertakings to offer competitors equal access to services, but this will be revoked if, as expected, shareholders vote to split Telecom and its infrastructure arm Chorus into separate companies next month.