Ihug forced to adopt prefix plan

By Chris Barton

Ihug has caved in to Telecom demands to provide 0867 prefix phone numbers for residential dial-up internet access, but has won some concessions in its negotiations.

Director Tim Wood said the third-largest internet service provider (ISP) was forced to sit down and talk because it was losing customers and could see no prospect of assistance from the Government.

"After meeting with both the Ministry of Commerce and the Commerce Commission it became apparent that there would be little support from that quarter," the company said in a posting to an internet news group.

Mr Wood said the cost of litigation and lack of agreement among other ISPs over what collective action might be taken meant negotiation was the best option. He said the company had lost about 200 customers - scared off by concerns they would have to pay the 2c a minute charge. The Ihug help desk had also been swamped by having to reassure customers they would not be charged the extra fee.

In a press statement, Telecom Industry Services Unit head Bruce Parkes said ISPs accounting for about 80 per cent of internet traffic had now agreed to use either the new 0867 numbers or Telecom's existing 0873 IP Net service which remains free to local calls.

But some ISPs, including ClearNet which has over 90,000 customers, are still holding out. Public affairs manager Clayton Cosgrove said while he understood Ihug's position, Clear would continue protect its customers from the 2c a minute threat. "In our view Ihug had no choice. All the deal proves is that Telecom has an absolute monopoly and can hold a gun to the head of companies."

He said the 0867 service was a third rate service that provided degraded Net access and enabled Telecom to control service levels of all of its competitors. Under the 0867 regime, Clear and other telco internet providers lose revenue gained from interconnect agreements with Telecom because the new numbers are outside the terms. Mr Cosgrove said Clear had looked at legal remedies and would shortly define its course of action.

Mr Wood said Ihug was most concerned its 60,000 customers would suffer a drop in service under the new regime. He said it was now satisfied that would not occur, but to be sure had secured a written service level agreement with the provision for a third-party audit.

Ihug also managed to push out the changeover date for 0867 to November 1, rather than the August 1 deadline proposed by Telecom. Mr Wood said Telecom had agreed to cover the cost of moving its subscribers to the new numbers, which he had previously estimated to be about $500,000.