ACCC denies Telstra request to limit Optus

ACCC denies Telstra request to limit Optus

Summary: 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.

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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.

(Credit: Telstra)

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.

Topics: Telcos, Broadband, Government, Government AU, Optus, Telstra

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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Talkback

64 comments
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  • .

    Why should Telstra continue to let Optus leech from them?
    anonymous
  • "True Competition"

    What this country needs is "True Competition" no the over regulated stuff OPTUS loves!!
    anonymous
  • .

    Exactly. Optus have the ability to supply fixed-line services over their existing HFC infastructure. I am sick of every other telco getting a free ride at Telstra's expense, especially service providers that have enough off-shore backing to support subtaintial independant rollouts, yet continue to choose to make minimal investments to what is a rapidly deteriorating network.

    Optus' outage in Queensland, coupled with their ailing 3G network is a perfect example of the impact that Optus' minimal-investment, maximum-overselling strategy is having on the quality of service that it offers.

    I refuse to purchase any telecommunications services from Optus, or any telecommunications service delivered using Optus carriage - the few services I do have fitting this description lay unused until my contracts expire.
    anonymous
  • I'll Tell You Why

    "Why should Telstra continue to let Optus leech from them?"

    Probably because Optus share exactly the same right to access it as Telstra do? The CAN is a declared asset afterall and just because Telstra own the right to manage and maintain it, it does not give them permission to decide who should have access.

    Both Telstra's and Optus' HFC networks are incapable of providing business grade services due to their inability to offer guaranteed symmetric capacity which is what businesses demand. In addition to this providing HFC connections to multi-dwelling units is cost prohibitive. I believe you'll find in just about every other circumstance Optus use their HFC network in preference to the CAN whenever possible. I also believe you'll find Telstra have very similar business rules to Optus' in relation to connecting Businesses and MDU's using their HFC network for the same reasons.
    anonymous
  • Get That Up You

    You like that Telstra? Consumer choice is such a PITA.
    anonymous
  • Deregulation

    If you want to see what happens when you remove regulation just have a look at the US economy.
    anonymous
  • isn't this a non issue?

    Didn't Optus stop providing new services via Telstra's WLR product earlier this year?

    I know they only offer ADSL where they have their own hardware, and obviously cable where it's available.
    anonymous
  • Blind as a Bat Bell

    At what stage did anyone talk about business grade services?

    What they are talking about is fixed line services a.k.a. PSTN lines. The issue here is not to deliver business grade services across a HFC network that passes homes but to deliver PSTN equivalence across a network that is already running past these properties and owned by that company.

    It just goes to show that it really is cheaper to wholesale from Telstra then build your own infrastructure.

    BTW ... How's it going at TTTT?
    anonymous
  • What else can we expect from Bell?

    Great line, how about blaming the price of oil or the food crisis in the 3rd world on deregulation!!
    anonymous
  • No I just do research

    "At what stage did anyone talk about business grade services?"

    I suggest you go and actually have a look at Telstra's submission to the ACCC before trying to sound smart again. Optus' response is also a good read.

    I'll even include a link to all relevant documentation for you since you obviously haven't bothered:
    http://www.accc.gov.au/content/index.phtml/itemId/806382
    anonymous
  • @isnt this

    yes, apparently they did. but they must be finding it more expensive with all the maintenance, and now seem to have now reverted. which obviously just means [obvious to anyone who isn't paid to say otherwise] no progress, just the same old story, due to these types of accc rulings.
    anonymous
  • @deregulation

    which economy is that, the largest economy in the world, which is simply in a cyclical economic downturn at the moment, haha, what a clown.
    anonymous
  • @research

    perhaps then, you need to start researching outside your tttt and accc base. obviously you and the chums down at tttt are chuffed at having the accc promote no further investment.
    anonymous
  • @i'll tell you

    declared or not, why shouldn't optus use their own, when it's already there?

    they invested but now find it too expensive to maintain and really just too much work in comparison to leaching off telstra, so they have changed their minds and now want out. this way of thinking and the accc ruling is not only stopping progress but *making us go backwards*. the last ruling made, the accc said that optus should still be allowed to use telstras, because telstras was superior. how sad for australia.

    obviously james, you and the rest of the tttt promote no further investment or even a reversal of progress because no one will build when they can pocket the profits, not invest and just continue to use telstra's lines, declared or not. particularly when you consider the nbn is still years away. or if ever, if you and the tttt get your way.

    if you cant see or wont recognise this decision is a not only *not progressing but regressing*, well you are simply a sorry and bitter individual.

    but that's tttt progress for you. mission accomplished.
    anonymous
  • @get that up you

    yes very smart, you can choose either telstra or telstra via someone else. either way telstra get money. with optus using their own hfc network this would exclude telstra and give real choice. but optus are too lazy.
    anonymous
  • I'll Tell You Again

    "declared or not, why shouldn't optus use their own, when it's already there?"

    That's the whole point Tony; they do! Optus only use the CAN (i.e. the low tech copper wire from a customer's premises to the exchange) for Business customers and MDU's within their HFC footprint.

    "they invested but now find it too expensive to maintain and really just too much work in comparison to leaching off telstra, so they have changed their minds and now want out."

    They invested due to a compelling business case initially making the whole venture worthwhile. When Telstra decided to build their own HFC network overlapping the Optus network street for street it severely damaged this business case resulting in both companies writing down billions in their respective network's values. Nevertheless as previously stated Optus will use HFC whenever the option is available, but if the costs to connect a customer do not stack up such as in the case of an MDU then they will use the low-tech copper which is already connected to the customer's premises and pay Telstra a wholesale ULL rental fee to access it.

    "this way of thinking and the accc ruling is not only stopping progress but *making us go backwards*. the last ruling made, the accc said that optus should still be allowed to use telstras, because telstras was superior. how sad for australia."

    Wrong again. The High Court of Australia has determined that Optus, as with all other competitors are entitled to access to the CAN. This was also a condition placed on the sale of Telstra. The ACCC's determination has nothing to do with the network being "superior", but as previously stated HFC does not offer symmetrical capacity guarantees which is what many businesses require. In addition to this the costs of connecting cables to MDU's is prohibitively expensive, requires signed authorisation from the body corporate and just to recoup the connection costs would require the customer(s) to retain their service for an extended period of time. Given MDU's also have a higher proportion of renters they're obviously going to be less inclined to sign up for 24 month contracts, which is why using the CAN (which already has the necessary cabling into the premises) is more commercially viable.

    "obviously james, you and the rest of the tttt promote no further investment or even a reversal of progress because no one will build when they can pocket the profits, not invest and just continue to use telstra's lines, declared or not."

    My tip for you is to stop sourcing all of your information from the propaganda machine over at NWAT and do some research.
    anonymous
  • Tag teamed by Rhodes Scholars

    The point is that one of the primary reasons for America's economic woes is due the regulation (or lack thereof) in the financial sector. Lenders were providing mortgage finance to unemployed, bankrupt hillbillies and now everyone over there is paying the price.
    anonymous
  • "They only use the CAN for business customers or MDU's"

    Hi James, I can personally say thats utter crap. Optus technicians went down my own street, removing all the Optus boxes. For your information the house I live in was fully optus cable equipped. When calling to see if I could have an Optus cable connection i was told that "Im sorry, we dont service your area with cable, you'll either have to take a landline with ADSL or a wireless connection instead" So don't tell me they actively use their network instead of using Telstras. Not only do they use Telstras network as a preference, but they also have been REMOVING access that was previously there to the cable network. This was in doveton, vic. Ask your bosses back at optus about why we had a mass derollout via their technicians about 3 - 4 months ago.
    anonymous
  • @tag

    if only zd and the others could use regulations to stop paid comments and stop the james' from spreading their lies, then regulations would be great, haha
    anonymous
  • @james

    quick james, a call to tttt hq to get a low life response, to the truth about optus's *regression*. funny this mans actual experience is the complete opposite to what you keep saying? obviously he must be a nwat stooge, liar that's it. haha
    anonymous