Telstra chief shocked as Telecom injunction fails

By Brian Fallow

WELLINGTON - Telstra New Zealand chief executive Peter Williamson was yesterday "shocked and disappointed" by a High Court decision allowing Telecom to refuse new re-billing arrangements for Telstra customers.

Re-billing allows Telstra customers who still use Telecom services to request that their Telecom accounts be forwarded to Telstra for payment. Telstra argues that re-billing is vital to its business in New Zealand, which has been built around providing integrated management of telecommunications services to business customers.

Telecom has given an undertaking to the court to continue to honour existing letters of authority (for Telstra to deal with Telecom on the customer's behalf) until they expire - typically within a year. But the court has refused to grant an interim injunction requiring Telecom to honour new letters of authority.

"Although Telecom's retreat from re-billing may make Telstra's business more difficult, and may make management of their telecommunications less convenient for what would appear to be a relatively modest proportion of Telstra's corporate customers, there does not appear to be anything to debar Telstra or those customers from offering or receiving [telecommunications management services] whether with or without re-billing," Justice Williams said.

It was difficult to stigmatise as anti-competitive an action taken by one competitor in a fiercely competitive market to decline to continue to offer a service to another competitor to which that competitor was not entitled initially, and which it enjoyed for only a relatively brief period as the result of an informal arrangement agreed by a couple of middle managers and was never sanctioned by the competitors themselves, he said.

Mr Williamson said Telstra reserved the right to consider further action on the matter.

It would still be able to add value to its customers' telephone operations, but having to gather the necessary information from them rather than direct from Telecom would be costly for Telstra and a major annoyance for the customers.

Telecom had argued in the High Court that granting the injunction would change the letter of authority from a mere authorisation into a set of one-sided mandatory obligations on Telecom.

It would require Telecom to pass on valuable, commercially sensitive information about its customers and services to a competitor, Telstra, on demand and without payment or other consideration.

Justice Williams' ruling comes at a time when the Government is considering proposals by the Ministry of Commerce to tighten the Commerce Act's provisions against abuse of market power, bringing them in line with the Australian law.

Some of Telecom's competitors are among the most vociferous critics of New Zealand's competition law, saying it is too permissive and entrenches the advantages of the incumbent, Telecom.

"I just don't understand it," Mr Williamson said.

"The information technology and telecommunications component of every business is growing by the week. This action by Telecom reduces New Zealand's ability to compete."

Telecom spokesman Clive Litt said that Telecom's position had always been that it was making a straightforward decision in ceasing re-billing and the judge's comments supported that view.