NZ regulator to probe Telecom wholesale discounts

Dylan Bushell-Embling
01 Sep 2009

New Zealand's Commerce Commission has launched an investigation into Telecom NZ's “loyalty” program, over allegations the promotion breached the incumbent operator's separation agreement.

The inquiry comes days after a ruling by New Zealand's Independent Oversight Group (IOG) that the offers breached the agreement.

If found to be in breach, Telecom faces a fine of up to NZ$10 million ($6.5 million), plus NZ$500,000 for every day that breaches continue following the ruling.

Telecom was last year ordered to separate into three business units – retail, wholesale and network infrastructure – and open up access to its network on a wholesale basis.

But Telecom has since December been offering cheaper rates to its Auckland wholesale customers if they agreed to give it at least 90% of their business. Rivals Vodafone and Kordia both complained to the IOG, prompting the initial investigation.

The Commission is expected to make a decision by October 9. While the regulator has also received complaints about the same offers under the Commerce Act, it has not yet decided whether to pursue a separate investigation.

While the Commission is in charge of determining if infringement has taken place, it will be up to the High Court to determine the fine. The Court is also empowered to issue injunctions, or order Telecom to pay damages to injured parties.

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