Telecom hits TelstraClear where it hurts

By PAUL BRISLEN

Telecom has dealt a severe blow to arch-rival TelstraClear, wresting a key $30 million contract from the Australian-backed company.

The contract, signed with the Department of Corrections in March, was to provide services using state-of-the-art technology over six years to 4500 staff at 230 sites.

It was to be completed within six months. But the contract has been terminated after just three months and a new one signed with Telecom.

It is not clear precisely why, although TelstraClear said the decision was "amicably" reached.

Corrections information technology manager Derek Lyons said the department and TelstraClear had "encountered some issues" and these could not be resolved satisfactorily.

TelstraClear head of sales Sunil Joshi said he regretted the decision.

"All efforts will now go to ensuring a smooth return of services," Joshi said.

The contract marked the first time Corrections had chosen any company other than Telecom for any of its telecommunications needs.

TelstraClear has been aggressively trying to win high-value corporate and Government business from Telecom in the past year.

Those plans were already under attack because the Government would not allow TelstraClear, or any other provider, to use the copper wires connecting homes and businesses to local exchanges.

Telstra claimed this so-called local-loop unbundling was essential to ensure fair competition.

Corrections originally chose TelstraClear because of its expertise with IP telephony which could dramatically reduce costs and allow the department to look at new capabilities like video conferencing.

Telecom is expected to work towards providing these services as part of the new deal.

It has been unwilling to let Telstra steal the march, meeting the Telstra new aggression head on.

It has won a number of multi-million-dollar contracts, including one with Carter Holt Harvey worth $60 million over five years.

The contract

* To provide video conferencing and voice calls.

* Is worth $30 million over six years.

* Will serve 230 offices and 4500 staff.