Australia's competition regulator late yesterday denied an application by Telstra to stop supplying Optus fixed line services within the SingTel subsidiary's cable network footprint.
Telstra had applied for an exemption in December last year about its obligation to supply Optus with fixed line services in areas of Sydney, Melbourne and Brisbane where Optus has deployed its HFC network which provides voice, broadband and pay TV services to end users.
Telstra said at the time that if the exemption were granted it would encourage Optus to invest in its existing HFC network within its existing geographic footprint.
However, the Australian Competition and Consumer Commission (ACCC) said in a draft decision that creating such an exemption for one carrier alone would be a disincentive to infrastructure-based competition because it would lead to a telco having a "reasonable expectation that making investments in infrastructure will lead to it and it alone being denied access".
"The ACCC's concern is that that could lead to a significant chilling effect on investment generally," the ACCC decision said.
The regulator was also concerned about Telstra's Foxtel stake, which would mean competitive benefits would not be realised. "In particular, the high content costs faced by Optus are a significant barrier to expansion that limits Optus' ability to achieve potential economies of scope on its HFC network and to recover the costs of expanding or in-filling the network," the decision said.
Apart from those reasons, it seemed to be against the ACCC's notion of fair play. "The ACCC is concerned that this exemption application from Telstra focuses too much on one competitor, rather than benefiting consumers and competition generally," ACCC chairman Graeme Samuel said in a statement.
Telstra was, however, granted an exemption from its obligations to supply declared domestic transmission capacity service on some routes, because the ACCC no longer considered them to be a bottleneck due to alternate fibre networks.
LSS pricing determinations held up in court
Also yesterday, the ACCC celebrated the Federal Court upholding the legal processes the regulator underwent to reach final determinations on access to line sharing services used to supply wholesale broadband services.
Of 10 objections raised by Telstra on the legalities of the determinations, the court found that the ACCC had been correct in all but one case.
The line sharing service pricing disputes which sparked the legal proceedings had been brought to the Commission by Primus Telecommunications, Chime Communications (iiNet), and Request Broadband (AAPT) in December 2004, November 2005 and April 2006 respectively, with final determinations made in 2007.
However, despite the court publishing a decision yesterday, orders from the decision will not be made until October.
"This decision affirms the ACCC's approach to the arbitration of disputes between telecommunications providers," Samuel said.
Telstra was unable to reply to requests for comment in time for this publication.