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Bad old days of telco scraps back again

By Deborah Hill Cone

Friday 27th June 2003

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Underdog ISP Ihug was yesterday crying foul after Telecom filed court action against it for services it gives Telstra Clear.

Telecom has filed a summary judgment application in the High Court in Auckland against Ihug, claiming $2.8 million as well as interest and costs for past 0867 link interconnection fees, even though it did not charge Ihug for them in the past and had agreed not to.

Ihug's 0867 agreement with Telecom has lapsed and it is in the process of trying to negotiate a new one but under the "bill and keep" regime, confirmed by the Telecommunications Commissioner Douglas Webb, local interconnect links were to be provided by the operator handing over the calls.

Summary judgments are only granted in cases that are so cut-and-dried the defendant has no arguable defence ­ which Ihug said was inconceivable in this case, given the commissioner had already found in favour of Telstra Clear on the same issue.

"Filing a summary judgment is cheeky in itself," Ihug chief executive Martin Wylie said.

He feared the new regime using a telecommunications commissioner was not making it easy for smaller players such as Ihug to compete against Telecom ­ although that was its aim.

The problem was players such as Ihug had to pay to take each issue through an expensive process before the commissioner, even if they were arguing the same points already determined in similar cases, such as the one involving Telstra Clear.

Mr Wylie suggested the commissioner's decisions should be binding across all similar organisations.

"It's like being half-pregnant ­ either you have regulation or you don't. Previously we had the courts to deal with, now we have the courts and the commissioner," he said.

He knows what he's talking about from both sides of the debate; Mr Wylie was the person who oversaw Telecom's litigation against competitor Clear when he was Telecom's company secretary between 1987 and 1996.

"This is trench warfare ­ they know they are not going to win it but there will be a lot of mud and a lot of blood just to move an inch," Mr Wylie said.

Telecom general manager of wholesale services Tim Lusk said a summary judgment was the appropriate next step to resolve the issue with Ihug.

Mr Lusk said Ihug had taken services that Telecom had expected to be paid for and this was simply a commercial dispute, not a regulation issue.

"We enjoy a very good relationship with Ihug ... but clearly we have two different positions we have not been able to resolve," Mr Lusk said.

In the past Telecom has argued the deal it has struck with Telstra Clear does not apply to Ihug because Telstra is in a "special category" because it is a network operator.

But Mr Wylie said Ihug also offered toll services and on-sold bandwidth, so this was not a valid distinction. Ihug had hired top QC Robert Fardell to represent it in the case against Telecom and hoped Telecom would get "severely biffed around the ear."

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