Telecom is offering a month's grace to residential customers who don't move to 0867-prefix dialling for internet access, but warns it will get tough soon.

"For the past few weeks we have offered customers who have been unaware of the introduction of 0867 a refund on their first month's charges as an act of good will," said Telecom spokesman Glen Sowry.

"Once we have explained it and given notice we will charge if they choose to connect with the internet on a non-0867 number."

But at least one customer intends to challenge the legality of the two cents a minute charge through the Disputes Tribunal.

PC World, columnist Geoff Palmer filed a claim with the tribunal after receiving a $29.70 internet use charge on his February phone bill.

The case was due to be heard on May 16, but last week Telecom sent him a letter saying it was dropping the charges on his February and March bills. From then on, charges would be imposed.

"I'll have to drop that proceeding and wait until they bill me again," Mr Palmer said.

He refuses to switch to Telecom's 0867 network, using his internet service provider's local number and incurring the two-cents-a minute charge after the first 10 hours online each month.

"The calls come from a residential phone and are to a local telephone number," he said in his claim.

"Telecom's charge is in contravention of the Kiwi share agreement signed with the government which guarantees free calls from local phone calls to residential subscribers."

In its letter to Mr Palmer, Telecom said its legal advice indicated the charge "falls well within the framework" of the Kiwi Share agreement.

"The Kiwi Shareholder, the Treasurer of the Government, has accepted this new system," Telecom said.

Treasurer Michael Cullen said it was not true to say the Government accepted the charges were legal.

"This issue will undoubtedly be dealt with in the telecommunications inquiry," Mr Cullen said through a spokeswoman.

The inquiry team, headed by businessman Hugh Fletcher, is expected to release an issues paper this week.

Telecom lost a Disputes Tribunal case last year when a Whangarei man successfully challenged its decision not to refund unused credits on phone cards made obsolete by a Y2K upgrade.

Mr Palmer said Telecom's complaint that internet callers stay online longer than voice callers does not justify introducing charges, as computer to computer calls existed when the company signed the Kiwi Share agreement.

"If Telecom ignored modems and the internet, or underestimated their impact or miscalculated their potential, that's tough, but that's business."