Telstra sticks to guns on Telecom abuse accusation

By Richard Braddell

Telstra is adamant that action by Telecom to cancel re-billing arrangements is an abuse of a dominant position which could do serious damage to competition in the telecommunications industry.

But according to Telecom, the issue that took them to the High Court in Auckland yesterday is no more than a customer's notice to appoint a third party as agent.

Telstra is seeking an interim injunction blocking Telecom from continuing with its cancellation of carrier re-billing arrangements which have been common since 1997 under a standardised letter of authority.

Telstra argued that without the order it will be impossible otherwise for it to continue providing the integrated telecommunications management services that have become the spearhead of an increasingly effective attack on the New Zealand corporate market.

Under carrier re-billing, customers can nominate to have billing for services provided by one carrier collected by another.

But while those arrangements are made between the customer and Telecom, Telstra claims the billing information provided by Telecom is essential for it to analyse telecommunications traffic and make recommendations to customers on strategic options.

While that may be so, Telecom said the letters of authority were at the core of the dispute and they amounted to no more than a notice that the customer had appointed a third-party agent which left Telecom with an "unfettered right to decide whether it will meet such requests, in whole or in part".

In addition, there was no consideration paid for re-billing and nothing to support a binding contract.

Responding to Telstra's accusation that it had been "commercially devious" in not notifying that it was no longer actioning re-billing arrangements, Telecom said it was under no obligation to do so.

According to Telstra, Telecom had not admitted it was doing nothing with re-billing requests until March 10, earlier that month explaining that they had not been acted on due to a shortage of resources.

In fact, Telstra claimed that Telecom had been reviewing its stance since October last year after the appointment of Richard Dammery as head of Telecom's interconnect group.

Before regarding the interconnection services as a revenue gathering opportunity, Telecom's former legal counsel had been "surprised to find that the interconnect group has assumed responsibility for functions unrelated to interconnection or wholesale service provision, and more directly related to the provision of retail services," Telstra said.

"He discussed the practice at a meeting in February 1999 and determined that it was not appropriate for the interconnect group to continue to provide carrier re-billing."

But while Telecom has refused to provide re-billing to other carriers, it confirmed in a meeting with Telstra on April 14 that the restriction did not apply to non-carriers or non-competing providers.

Telstra's claim is centred around breach of the dominance provisions in the Commerce Act and on estoppel, or the legal argument that Telecom has a duty to Telstra since it knew that Telstra was relying on the re-billing arrangements as the basis for contracts with its own customers.

That point was supported by an affidavit from a former Telecom interconnection manager, Geoff Weston-Webb, which said that Telecom was also aware of the importance to Telstra of using re-billing to offer managed telecommunications services to large corporate customers.