5. Telecommunications Interconnection Negotiations and Disputes

This Document is Archived

New Zealand Telecommunications Services Industry Developments: 1987-1997

[ Last Updated 17 November 2005 ]

5.1 Current Negotiations

BellSouth and Telecom are renegotiating their interconnection agreement. These negotiations are incomplete;
Clear and Telecom have been negotiating terms and conditions for number portability;
BellSouth and Telecom are negotiating terms and conditions for number portability. BellSouth says that negotiations have stalled.

Telecom has sued Clear for failing to pay sums Telecom argues are owed to it under the 1996 Interconnection Agreement signed by Telecom and Clear. On 5 May 1997, Clear filed a defence to Telecom’s claim and counter-claimed alleging breaches by Telecom of the Commerce and Fair Trading Acts. Clear has also joined the Crown in these proceedings as second counterclaim defendant. The Crown will be defending the action;
Clear alleges that Telecom has deliberately changed Clear customers who preselected Clear as their long distance calls provider, back to Telecom, and is taking legal action to resolve the issue;
Clear is taking legal action to resolve its allegation that Telecom has breached s.36 of the Commerce Act through misuse of confidential Clear customer information;
Clear has alleged that Telecom would breach s.36 of the Commerce Act through the purchase of a majority shareholding in Sky Television coupled with a programming agreement between Sky and Telecom;
Clear and BellSouth are both taking legal action against Telecom’s practice of selling services at a discount where the amount of discount significantly depends on the composition and value of the bundle, alleging that it is anticompetitive and contravenes the Commerce Act.

In early 1991 Clear and Telecom commenced negotiations on a local telephone service interconnect agreement. Negotiations broke down in mid 1991 and this led to legal action by Clear to resolve the issue.
The first court case (in the High Court) commenced in mid 1992 and the judgment, released in December 1992, found that use of the Baumol-Willig pricing rule for pricing interconnection did not contravene the Commerce Act.
Clear’s appeal to the Court of Appeal was heard in August 1993 and the judgement, delivered in December 1993, overturned the High Court finding.
Telecom appealed the Court of Appeal judgment to the Privy Council in mid 1994 and the subsequent judgment, released in October 1994, reinstated the High Court judgment.
In September 1995 Clear and Telecom reached a heads of agreement on terms and conditions for local telephone service interconnection, toll bypass interconnection (the previous agreement was due to expire in Dec 1995), and resolution of a number of outstanding legal proceedings. In March 1996 Clear and Telecom formally signed an interconnection agreement in respect of these issues.

In Mid 1993 Clear and Telecom commenced arbitration proceedings to resolve non-code [ Also known as pre-selection, a feature which provides for a users long distance calls to be automatically routed to the preferred long distance call provider.] access terms and conditions. Telecom agreed in the 1991 toll bypass interconnect agreement to provide Clear with non-code access when Clear’ market share exceeded 9%. Clear achieved this within one year of commencing operation, i.e. about the second quarter of 1992.
The arbitration decision was released in May 1994 and determined the terms and conditions for the provision by Telecom of non-code access to Clear.

Printed: 24/11/2009