Information Technology Reference
In-Depth Information
Figure 3. Source data Statistics New Zealand ISP Surveys and Telecom Management Commentaries
that '0867' enabled separation of internet traffic
from voice traffic, thereby enabling the firm to
maintain voice service quality levels as agreed
under the 'Kiwi Share' terms. That consumers
could still use 10 hours per month of internet
connection free of charge was offered as a sign
of good faith (credible commitment) that Telecom
was not acting anti-competitively in order to shut
down rival ISPs, as such usage would still incur an
ICA liability to Telecom of up to $12 per month
for each consumer dialling a non-IPNET ISP.
The Minister, in one of his last acts before being
removed from office in the 1999 election, approved
the variation to the 'Kiwi Share' agreement 17 .
powers to bring a case - in effect, 'free-riding'
off the Crown to cover the costs of bringing a
suit against Telecom. In August 2000, one month
before the 2000 Inquiry reported its findings, the
Commission laid charges under the Commerce
Act. The Commission alleged that “in introducing
0867 Telecom sought to prevent or deter competi-
tive conduct by other telecommunications network
operators and Internet service providers” (MED,
2001). However, both the High Court (2008) and
the Court of Appeal (2009) found that the '0867'
action did not breach the Act 18 .
Despite the pending litigation, the original 1996
ICA that had stimulated the strategic exchanges
ran its full course of five years. It was replaced
first in 2000 by a 'bill and keep' agreement and
in 2002 with regulated contracts specifying a
termination rate of 1.13c/minute. The majority
of ISPs acquiesced and acquired Telecom '0867'
accounts, at least in respect of servicing their heavi-
est dial-up internet customers. Dial-up internet
traffic continued increasing unabated, reaching a
peak of 35 hours average consumption per month
for each of the 850,000 dial-up internet access
Competitor and Administrative
Strategic Responses to '0867'
Despite numerous complaints about Telecom's
action over '0867' being a potential breach under
Section 36 of the Commerce Act, no other firm
(either ISPs or network operators) brought any
litigation. All, however, petitioned politicians and
requested the Commerce Commission to use its
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