Telecom New Zealand faces investigation

Things aren't looking so good for Telecom New Zealand these days. The country's Commerce Commission said it opened up an investigation into the service provider's failure to honor an agreement made through the New Zealand's government-mandated breakup of the service provider's fixed-line monopoly. As a result, New Zealand's High Court is considering "remedial order and/monetary penalties and damages" if it finds that the agreement had been compromised. Similar to U.K.'s breakup of BT, the New Zealand government mandated that Telecom New Zealand split up into three primary units (retail, wholesale and networks) and sell wholesale access to competitive service providers on its local network.

What prompted the commission's investigation was an Independent Oversight Group's report that revealed Telecom New Zealand breached ‘wholesale-loyalty' agreements with competitive wholesale carrier customers. One service provider that's not happy with Telecom New Zealand's actions is Vodafone. After introducing a fixed-line telephone offering to complement its wireless service, Vodafone filed a complaint with the IOG that said Telecom New Zealand's wholesale pricing offer ‘breached its agreement.' A condition of the government-forced restructuring does not allow Telecom New Zealand to offer pricing plans to the detriment of other competitors or wholesale services that would make a competitor's service less viable.

Although Telecom New Zealand officials did not comment on the investigation, the commission said it will discuss the issue with the service provider's wholesale unit and Vodafone and determine the next course of action by Oct. 9.

For more:
- Wall Street Journal has this report

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