Telstra Clear will not support a Code of Practice for the Copyright Act.
The code is needed to police Section 92a of the new Act, which requires Internet Service Providers to disconnect anyone accused of pirating copyright material.
Telstra Clear says it considers the Copyright Act is unworkable and ambiguous and the company won't support it.
Telstra Clear has two main concerns: one is the fact that Section 92a regards businesses as ISPs if they supply workers with internet connections.
Under the code, these companies would be forced to disconnect workers accused of piracy by rights-holders.
The other is the risk that accusations of piracy could force ISPs to divulge confidential details about clients.
Internet New Zealand deputy chief executive Jordan Carter says the code can't be implemented without Telstra Clear.