IOG Decision is not the tip of any iceberg

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Posted Thu 27 August 2009 @ 1:50 p.m. by Ernie Newman

Independent Oversight Group - take a bow! Like a middle aged Alsatian you've dozed peacefully on the carpet for 18 months until everyone stopped noticing you. But the moment there's trouble, you're there with teeth bared.

There's always going to be tension between Telecom's legitimate right to protect its business, and the equally legitimate right of its competitors and end users to know that its market dominance is not being misused in ways contrary to the long term interests of end users. The boundary is very hard to define.

I always felt uncomfortable about the "Loyalty Discounts." I'm not a competition lawyer (no, that is not an apology!) but I've played around the edges of the topic for quite a while now. And to me the discounts just didn't feel Kosher.

At some point Telecom had to push the boundary to see what happened. Not to do so would have had its shareholders up in arms.

So the IOG has spoken. Hopefully Telecom will take remedial action pronto. I'd expect it to – that’s its style these days.

Overall Telecom has implemented the separation process with professionalism, skill and integrity. Separation is inherently a frustrating process. Its an attempt to extract the best features of both worlds - the downward cost and price pressures of competitive market, combined with the reality a natural monopoly. Its not easy to live in, deal with, or regulate.

So given the kind of week Telecom has had, lets not over react. This is not the tip of any iceberg. I hope Telecom's competitors will accept their win gracefully and get on with doing business.

Categories: Fixed line carriers | ISPs | TUANZ policy

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2 comments

  • Neil says:

    If it walks like a duck. Sounds like a duck, it probably is a duck.

    Telecoms actions were obviously and blatently anti competitive.

    The mere structure of the offer was anticompetitive. It is just outright gall for them to try to say otherwise.

    If they wanted to offer loyalty discounts, it could have been based on volume of sales. Not the percentage of sales put through Telecom. The latter option strikes me as the anticompetitiev option.

    A quick question. How would Telecom have know the percentage of lines put through Telecom wholesale as opposed to LLU? Orcon and Vodafone unbundled is dealing with Chorus and Telecom Wholesale should not know the details of Chorus sales. Not unless one side of telecom is giving their other arm, the competition to Orcon and Vodafone, the detailed information.

    Memories. Oh they do come back to me.
    I recall a time when Clear (remember those days) was about to launch it's 0508 service. The Product Manager of Telecom set the Local call charge for 0800 at 5 cents per minute. Remember. At that time, Clear had to pay 10cents for the first minute and 6 cents per minute thereafter just for interconnection to Telecom.

    My memory may be clouded but I can remember that someone pointed out to me that Telecoms Local charge for 0800 was half the interconnect price being charged to Clear. (check the timeline of pricing and service launch if you want) Someone suggested to me that this would almost kill. or significantly retard, Clears ability to gain customers. I won't state that it was the Telecom 0800 Product Manager at that time but it may have been someone close to him.

    Funnily enough, when I arrived at Clear to be the 0508 Product Manager. That was exactly what was happening.

    So, back to the present.

    When I look at the offering from Telecom Wholesale. If it walks like a duck, Sounds like a duck. . . . You work it out.

    Thank god Williamson is not still in charge otherwise I think that the activity from the IOG would have been different.

    Added: 28 August 2009, 1:32 p.m. Flag as Spam  |  Flag as Offensive

  • Alan says:

    Telecom gets caught out again for anticompetitive behaviour, the boys at the top get a nice fat pay rise and in the process are shafting the network engineers who administer the band aids to an antiquated copper network that has been starved of adequate investment for years. Whatever happened to the IP network that Telecom was going to replace it with. I do hope the Commission Commission get off their chuffs and launch an investigation into this anti-competitive behaviour but if it is anything like the saga of mobile termination rates I could be pushing daisies waiting on a binding determination.

    Added: 28 August 2009, 5:10 p.m. Flag as Spam  |  Flag as Offensive
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