Vodafone, Telecom ruling tomorrow

20:31, May 17 2009

After a day long hearing a judgment in the court case brought by Vodafone over Telecom's new mobile phone network is expected at midday tomorrow.

New Zealand's two biggest telecommunications companies squared off in the High Court at Auckland today. Vodafone is seeking an injunction to stop the launch of Telecom's new XT mobile phone network.

Today's hearing was marked by each company calling the other anti-competitive. 

Telecom said Vodafone was trying to pretend it had exclusive rights to mobile communications.

Earlier Vodafone claimed Telecom was knowingly trying to degrade its services through interference from Telecom's new network. 

Meanwhile, Telecom, represented by Pheroze Jagose from Chapman Tripp, said Vodafone was attempting to shut down fair competition by trying to pretend it had intellectual property rights over telecommunications in the country.


"Vodafone wants to act as if they held a patent on radio telecommunications in New Zealand and not act in proper competition," said Jagose.

He did not dispute that Telecom's XT network was interfering with Vodafone's network, but questioned the timing of Vodafone's litigation.

Referring to the fact Vodafone has known for months about the interference, and Telecom's imminent launch of its new network, Jagose said "it doesn't do" for Vodafone to not have known about possible problems much sooner.

"If Telecom walked in eyes wide open, Vodafone walked in with eyes wide shut," quipped Jagose.

Telecom further disputed Vodafone's case by saying that if interference arises between networks, then both receivers (Vodafone) and transmitters (Telecom) share the burden to resolve it.  Vodafone's argument, in seeking the injunction, is that Telecom must bear the burden.

Vodafone claimed the accelerated launch timetable of Telecom's new network was a "gamble" to strong-arm its way into an advantageous position.

Vodafone, represented by Julian Miles QC and Allison Ferguson of Wilson Harle, told Justice Geoffrey Venning that Telecom knew "rogue signals" from its new network were "inevitable" and knew they interfered with Vodafone's network.

Miles said bringing forward the launch date from June 2009 to next week, along with a concerted advertising campaign, was a deliberate attempt to capitalise on this.

"They can claim to be a superior service at the same time they are degrading their principle competitors' [Vodafone] network," said Miles.

Further, Miles told the court that since the XT network is currently only operating at 20 percent power, when it officially launches and ramps up to full power, the interference will become much worse.

Vodafone says this would be dangerous because its network carries the emergency services and district health boards communications.

Miles said Vodafone was willing to carry customers already on Telecom's XT network for the duration of the injunction - a statement that drew chuckles from the public gallery.

Much of the initial proceedings were spent discussing the highly technical nature of the issue.

The Radio Communications Act splits the radio spectrum - on which telecommunications services are broadcast - into parcels and gives the rights to those frequencies to companies like Vodafone and Telecom.

Telecom's new network occupies a neighbouring frequency of Vodafone's existing network, and Vodafone is claiming Telecom's transmissions are leaking into their network, causing interference.

Vodafone claims it discovered interference to its networks in January this year, and since then has suffered a large increase in customers cancelling their connections.

It wants an injunction to stop Telecom from transmitting on its new network - essentially switching it off - as well as damages, interest and costs.  The injunction would keep Telecom's network offline until it could demonstrate to Vodafone's satisfaction that the interference issues had been fixed.

Telecom has agreed to fit filters to its own cellsites if these are required to reduce interference.

Telecom group general counsel Tristan Gilbertson claimed in an email to his Vodafone counterpart last Friday that engineers from both companies had agreed the issue could not be resolved until Vodafone rectified its own head amplifiers, which are attached to cellphone towers to pick up signals from phones.

Telecom also released a Ministry of Economic Development review into the matter concluding Telecom was not violating the Radio Communications Act because it did not specifically require telcos to ensure all of their transmissions remained strictly within their allotted frequencies. However, it noted alternative interpretations of the Act were possible.