ACCC decision a blow to Telstra's competitors

by Stuart Corner

Friday, 15 August 2008

Page 1 of 2 ! Telcos wanting to compete with Telstra in the provision of fixed line telephone services are reeling from an ACCC decision that removes an obligation on Telstra to supply them with - in 248 Telstra exchanges  - two wholesale services that are essential components of an end-to-end service. The Competitive Carriers Coalition (CCC), which represents a number of Telstra's competitors, claims that the decision will be highly detrimental to competition and has accused the ACCC of being unwilling to stand up to Telstra. Furthermore, it believes that the conditions the ACCC intends to impose will provide ample opportunity for Telstra to indulge in 'gaming' and frustrate the intent of the decision: to promote competition in the provision of telephone services from competing infrastructure. The CCC has branded the ACCC's move "the decision of a competition watch dog that has lost its way" and it says "Investors will take a clear message from this decision. The Commission, having shown that it cannot control Telstra's market power, has decided to punish competitors. Investors in competitive telecommunications can expect to receive minimal protection for their investment from the ACCC, but will be expected to dip their hands into their pockets to invest more if they want to continue to provide services." In addition, the CCC claims that Telstra's market power still keeps voice service prices high. It quotes OECD figures showing that, for a fixed line basket of small business and home telephone services, Australia is 35 percent about the OECD average and second only in price to the Czech Republic and Poland. For SMEs it is 40 percent above average and again second only to the Czech Republic and Poland. Commenting in May after the ACCC released its draft decision on the issue, CCC executive director David Forman said it had "shaken the competitive industry...badly" because it "sets two profound and disturbing precedents... [that] are also strongly at odds with the Commission approach from the past." The first shock, according to Forman, was that "The ACCC has broken new ground by removing regulation in locations where there is not competing end to-end infrastructure. The ACCC has in the past only removed wholesale access requirements in Telstra network elements where there are several alternatives that completely bypass Telstra, such as on interstate transmission and fibre-rich CBDs." The second, and "more stunning" according to Forman, is that "the ACCC has for the first time removed regulation because there is insufficient competition. In the past it has assessed whether competition is strong and sustainable, and if so, whether it can be relied on to protect consumer interests. In this case the Commission has adopted a controversial new faith – that it will make competitors invest more if they want to stay in business." What exactly is the CCC so upset about? Please read on. CONTINUED << First page <   1 2 Next page > Last page - Post your comment >>

 

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