Telecom's wholesale business is being investigated by the Commerce Commission after customers complained to the agency that they were being charged too much to use part of the company's broadband service.
Telecom must charge its wholesale customers the same as it charges its own retail business for access to the same services.
But the Commerce Commission alleges Telecom Wholesale gave preferential treatment to its retail arm.
Telecommunications commissioner Ross Patterson says concerns were raised earlier this year about the prices being charged.
He says that at the time Telecom said it did not believe that its wholesale arm was involved in any breach.
The commission has begun an investigation and hopes to reach a conclusion by the end of March.
