Australian Competition Tribunal disagrees with Telstra pricing and broadband debate rages

The Australian Competition Tribunal has supported the ACCC in its decision of 25 August 2006 to reject undertakings provided by Telstra with respect to the wholesale pricing for its Unconditioned Local Loop Service (essentially the copper network that connects the customer to Telstra exchanges).

Telstra had put forth a proposed $30 per month flat rate for wholesale rental of the line (meaning the same wholesale price would apply in the city and rural areas). In supporting the decision of the ACCC to reject the price, the tribunal was not satisfied that:

• the charge for access of $30 per month, based on the averaging of costs across city and rural areas, was reasonable, or that
• Telstra’s pricing model could be relied upon to accurately estimate Telstra’s costs.

The decision comes in the midst of heated discussions over Telstra’s potential development of the Fibre-to-the-node (FTTN) broadband network and may have ramifications for pricing and costing considerations for that network. Graeme Samuel, Chairman of the ACCC, used the decision to argue that Telstra needed to release its FTTN proposals for public examination. Telstra has responded by raising its concern that the decision is at odds with the government’s policy of national averaged pricing for telecommunications, with uniform retail pricing for rural and metropolitan areas, and fundamentally hurts rural Australia.

Meanwhile, the G9, an Optus-led consortium of nine telecommunications companies, has lodged a special access undertaking with the ACCC, setting out prices and access terms for its proposed FTTN broadband network. The ACCC will release a discussion paper shortly and then undertake a public consultation process to assess the undertaking.

The future of the development of, and access to, high speed broadband remains a critical issue in telecommunications.

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