Telecom 'tax' limits the free in Clear's zfree net access

By CHRIS BARTON

Web users will need to limit their online time to 10 hours a month to get free usage with Clear's new zfree service - otherwise they will attract charges from Telecom through dialling a non 0867-prefixed phone number.

While zfree consumers are being offered unlimited internet access at no charge from Clear, they will be billed by Telecom at the rate of 2c per minute if they exceed 10 hours a month. On its website - www.zfree.co.nz - Clear advises it accepts "no liability for those charges."

Telecom spokesperson Glen Sowry described zfree as a Clayton's free internet.

For each hour zfree consumers are online they provide Clear with $1.20 in interconnect termination payments from Telecom. But in contrast to Clear's paid service, Clearnet, customers on zfree will not be rebated Telecom's 2c per minute charge in Clear toll call credits.

"Clear stands to make a lot of money out of zfree at the customer's expense," said Mr Sowry.

Clear's communications manager Ross Inglis described the 2c per minute charge to consumers as a Telecom-imposed internet tax.

"We think the charges imposed by Telecom are illegal and they're currently under review by both the Commerce Commission and the Telecommunications Inquiry, " said Mr Inglis.

In a further development in the rapidly growing free internet market, freenet, which launched in March and now has 20,000 customers, has dropped its 10 hours per month free limit.

"Now that the environment has changed, we're going totally free with unrestricted access," said freenet general manager Julio Coelho. "It was always a strategy for us."

The latest twists to the free internet trend and the 0867 debate put more pressure on the commission to decide whether Telecom's 0867-prefixed dialling scheme is anti-competitive.

But Geoff Thorn, manager of the commission's Commerce Act division, said an announcement was not expected until mid-May.

If the commission decides a matter is in breach of Section 36 of the act it then has three options: issuing a warning in the hope the offending company will alter its behaviour; attempting an "administrative settlement" which negotiates a way to rectify the problem; or filing a statement of claim in the High Court.