Telecom New Zealand (ASX:TEL) faces penalty payments in the millions if legal proceedings brought by the Commerce Commission that allege that the company has favoured its own retail business at the expense of other telcos are successful.
In a statement, the commission said it was alleging that Telecom failed to provide other telecommunications service providers with unbundled bitstream access (UBA) in conjunction with the sub-loop extension service (SLES), when it provided an equivalent service to its own retail business.
According to the commission, the UBA/SLES service was intended to allow other telecommunications companies to provide their own voice services from unbundled exchanges in conjunction with a Telecom broadband service from a roadside cabinet.
“The Commission considers Telecom’s failure to provide this service to other telecommunications companies while providing it to its own retail business has caused serious harm to competition in telecommunications markets, deterred efficient investment by other companies in telecommunications infrastructure, and resulted in significant commercial gain to Telecom,” the statement reads.
NZ Telecommunications Commissioner, Ross Patterson, said Telecom’s alleged failure to provide this service had reduced the financial feasibility of unbundling local exchanges, reduced the extent of unbundling, and consequently reduced the extent of retail competition.
If Telecom is found to have failed to comply with operational separation requirements under amendments to New Zealand’s Telecommunications Act 2001 then commission may request that the High Court impose penalties of up to $NZ10 million for the breach, plus $500,000 per day for breaches continuing after the decision by the High Court.
In addition, the High Court may order Telecom to pay damages to injured parties and may issue orders requiring Telecom to undertake other remedies, including injunctions restraining Telecom from behaviour that breaches the undertakings.
Among a number of requirements the amendments call for transparency, non-discrimination, and equivalence of supply in relation to certain telecommunications services.
The news comes just days after Telecom secured a piece of the ultra fast broadband (UFB) initiative with the telco’s Chorus business chosen to deploy fibre in the remaining 24 of the 33 candidate areas.
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