Clear may join i4free in telcos' court spat

By RICHARD BRADDELL

WELLINGTON - Clear Communications is expected today to try to join i4free's High Court proceedings against Telecom as the battle over free internet service intensifies.

Clear declined to comment on its strategy yesterday, but it is already closely involved in i4free's free internet service which relies on Telecom's local lines for getting calls from customers.

Telecom had restricted calls to i4free last week until a temporary injunction ordered it to treat i4free on equal terms as other internet service providers. Telecom had argued the flood of calls to i4free ran the risk of jamming up one of its key exchanges.

Clear is involved in i4free's business in three ways: it provides network services to i4free; it rebates to i4free a proportion of interconnection fees paid by Telecom; and it has offered the court an indemnity against any Telecom counter-claims.

Annette Presley, i4free's chief executive, rejects the suggestion that the share it gets of the 2c a minute in interconnection revenue from Telecom is the driving force in the fledgling provider's business plan.

If that were the case, she says, then i4free could expect a short life since its slice of interconnection revenue will disappear when Clear's interconnection agreement with Telecom expires at the end of the year.

Instead, i4free will earn its keep from what she describes as a "next-generation" consumer marketing and shopping network model that has been successful overseas. Advertising will play a small part. While adverts will eventually be on screen 30 per cent of the time, they will occupy less than 3 per cent of the space.

If staying with Clear has bought a fight with Telecom, Ms Presley says it is for the good reason that Clear's internet links cost a third of those offered by Telecom.

Nevertheless, if Telecom was prepared to pay the $16 million to $20 million it is reputed to have paid ihug to move on to its 0867 access network, i4free would be delighted to shift.

An information memorandum relating to ihug's merger with Force Corporation says $13.3 million was received by ihug from "a telecommunications company operating in New Zealand."

Ms Presley agrees the present controversy has accelerated i4free's profile, but says it is publicity she would have been happy to live without.

"Becoming a media sell really wasn't part of the goal, to be honest. Free internet is what we want to provide and we should be focused on hiring web developers because we are going to be developing software which we are going to export."

Ms Presley, one of i4free's founders, says it is a sad fact that New Zealand's regulatory environment remains unbalanced in favour of Telecom after a decade. With her partner, Malcolm Dick - they are two of the four shareholders in i4free - she went to Australia in the early 1990s to set up a telecommunications business because the regulatory hurdles locally made the New Zealand market too tough.

Mr Dick had been prominent in New Zealand telecommunications as a shareholder in Netway Communications, which had been owned in a 50 per cent joint venture with Telecom.

"We decided that with no regulatory body that had any power apart from the courts, we couldn't survive here so we went to Australia and we grew a company that had 200 staff and was turning over $100 million."

Ms Presley claims no animus where Telecom is concerned.

"I guess I just find it sad that here we are eight to 10 years later and nothing's changed. Here we are with another product, and we can't get off the ground because it's a monopolistic environment," she said.

Ms Presley and Mr Dick returned to New Zealand in 1997 to set up telecommunications company CallPlus which now provides services to i4free.