Telstra issued a press release claiming that the Unwired submission "underline[d] how the regime was negatively impacting on investment in alternative access technologies such as wireless broadband," and that it "criticised the ACCC's position that there was little prospect for consumers to use services that did not rely on Telstra's copper network."

Unwired's manager regulatory & corporate affairs, David Havyatt, hit back with an email to Telstra's group managing director public policy and communications, David Quilty, saying: "you must be getting desperate when you seek solace in support from Unwired for your regulatory stance."

Havyatt continued: "Unwired does not share the Telstra view about impediments to investment as expressed through your rhetoric, uncritically...We would like to think we can make reasoned contributions to the regulatory debate without having those stances co-opted by Telstra in its desperate search for credibility."

Unwired made the submission in response to recent ACCC decisions on provision by Telstra of unconditioned local loop (ULL), wholesale line rental (WLR) and local carriage service (LCS) and on the mobile terminating access services (MTAS) provided by all mobile operators.

According to Havyatt its submission "criticised the decisions of the ACCC in relation to MTAS and the exemptions of the WLR [wholesale line rental] and LCS [local carriage service]." The WLR and LCS are essential for switch-based telcos that want to provide telephony services over Telstra's network.

Havyatt claimed that "These decisions were both inconsistent and framed to invite the Minister to regulate retail fixed to mobile calling, instead of the Commission persisting in its powers to break the economic power of Telstra in fixed line services."
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Unwired presently provides wireless broadband services using proprietary technology. As an early player in this market it faced little competition from mobile operators, its price and speed were comparable to ADSL services and its portability gave it a competitive advantage. However on speed and price its service now compares poorly against ADSL and wireless broadband services from mobile operators are more than competitive on price, speed and coverage.

Unwired, however has vastly more spectrum (100MHz) than mobile operators and is banking its future on mobile WiMAX technology. Unfortunately its plans to upgrade its network are now several years behind schedule thanks to delays in mobile WiMAX development.

As it prepares to launch WiMAX services it claims, through the submission, that the ACCC's pricing decisions are giving both ADSL and wireless broadband operators a pricing advantage they do not deserve.

Unwired claims that the ACCC has underpriced the ULL service, enabling ADSL operators to be stronger competitors than they should be and at the same time is not reducing the price of the mobile terminating access service fast enough, enabling mobile operators to use high margins on fees charged for terminating voice calls on their networks to subsidise wireless broadband services.

Unwired says that the ACCC's inconsistent approach to these two price regulation issues is policy driven and that this policy is based on "the wholly unsupported view that the regulatory regime is designed to promote facilities based competition, and that such competition can best come from ULL based services."

The ACCC notes that its enforced reductions of MTAS prices in recent years have had little effect on retail fixed to mobile calling prices, and acknowledges that this demonstrates Telstra's continued market power in the fixed voice market. Yet, the Unwired submission points out, the ACCC has made decisions (since overturned by the Australian Competition Tribunal) that would have exempted Telstra from the requirement to supply the WLR and LCS in some areas; a decision that Unwired says has the potential to reduce the amount of competition Telstra will face in the fixed to mobile calling market.