Clear's strategy looks a winner

By RICHARD BRADDELL

WELLINGTON - Clear Communications' refusal to go along with 0867 internet access appears to be paying off, with the revelation that Telecom is shelling out $6.75 million as a condition of the three-month internet truce agreed in May.

The $6.75 million payment is being made in three tranches with the final instalment due next month.

It covers all internet connection charges due to Clear over the period and was revealed in documentation just made public under disclosure rules that came into effect this year.

The payment is a key element of the three-month ceasefire which was agreed as both sides sought to lower the temperature in an increasingly ill-tempered dispute over Telecom's imposition last year of 0867 coded internet access.

Under an "economic incentive" instituted by Telecom, customers of internet service providers who did not offer 0867 access would pay a 2c a minute charge for ordinary dial-ups after the first 10 hours a month.

But while Telecom argued that 0867 access was essential to manage network overloading, Clear staunchly opposed its introduction because of Telecom's interpretation that 0867 internet connections were not covered by their 1996 interconnection agreement.

On previous indications, that would have deprived Clear of $12 million in interconnection revenue. That is somewhat less than the $6.75 million for the three months ending August 31, which equates with $27 million annually.

The much higher figure probably reflects rapidly growing internet usage and the fact that while Clear had lost volume on its flagship internet provider, Clear Net, free internet is more than replacing the lost traffic.

The dispute came to a head this year when Clear turned around unattractive terms in the 1996 interconnection agreement by luring free internet providers to domicile themselves on its network, offering a share of interconnection revenue due from Telecom.

But with the dispute landing in the courts, the combatants used Clear's notice in May that it wished to renegotiate the overall interconnection agreement which expires at the end of this year as a circuit breaker and an opportunity to put their relationship on to a more rational footing.

The truce also maintains Clear's position should the two sides fail to agree by the August 31 deadline. Although the agreement provides for rollovers by mutual consent, it also stipulates that conditions return as close as possible to those prevailing before the agreement should negotiations fail.

The agreement also includes a provision that confirms the status of i4free connections which begin life as 0867 numbers in Telecom's network, but become Clear numbers via the Clear/Telecom number portability agreement.

If the pre-truce relationship is reinstated, Clear would pay Telecom 0.5c a minute for porting the numbers, and Telecom 2c a minute to Clear for interconnection.