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  • Draft ruling says Telecom targeted competitive threat

    Telecom's motives in offering loyalty discounts to wholesale customers were questioned more strongly in a draft copy of a decision by Telecom regulator the Independent Oversight Group (IOG) than in the final public version, released yesterday.
    The IOG, which is charged with monitoring Telecom's operational separation undertakings, refers in both versions of its decision to an executive paper from Telecom Wholesale. That paper contains comments that, in the IOG’s view, establish that the discount offers were constructed to prevent access seekers from using local loop unbundling (LLU).
    Yesterday, the IOG ruled the dicount scheme constituted a "non-trivial" breach of Telecom's separation undertakings, a finding that could lead to a maximum fine of $10 million.
    A draft version of the decision, however, is much more strongly worded, saying the executive paper, from which the loyalty scheme sprang, "made it plain that the intent was to lock in a segment of customers who do not intend to unbundle and to provide Telecom with a competitive alternative to UCLL being provided by Vodafone and Orcon… “
    In the final copy of the IOG report, this was changed to “However, the effect of the loyalty offers was to enter into contracts with a segment of customers … “
    Telecom Wholesale denies it deliberately designed the loyalty discounts so that certain service providers, those that had already invested heavily in local loop unbundling, couldn’t take them up. In the draft, Telecom says the offers were designed to meet the request of a group of customers with a pressing need.
    However, the draft says, Telecom Wholesale “did not provide convincing evidence of such requests.
    “The offers were in effect discriminating against those who had participated in unbundling,” the final copy of the IOG decision finds.
    According to the IOG, unbundling is a “fundamental plank of operational separation” as mandated by the government.

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