ACCC lifts Telstra competition notice

update The national competition regulator has revoked a notice it issued to Telstra last April for a controversial price increase on the telco's wholesale line rental services it provides to competitors, due to new regulatory changes.

"In light of the changing regulatory circumstances, including the declaration of the wholesale line rental service, it was not necessary to keep the notice in force," the Australian Competition and Consumer Commission said in a statement issued this morning.

After the competition notice was issued, the nation's number two telco Optus immediately announced its intention to sue Telstra in the Federal Court for damages in the range of 10s of millions of dollars over the price increase.

For the ACCC to declare a telecommunications service means the telco offering it must also offer access to other providers, at regulated prices.

"The declaration of the wholesale line rental service came into effect on 1 August 2006. The declaration was made at the same time as the declaration of three other key telecommunications services and formed part of the ACCC's strategic review of fixed network services," the regulator's statement said.

"Declaration provides options for the resolution of disputes about wholesale access to and pricing of a service."

The regulator has issued pricing guidelines for Telstra's wholesale line rental service.

The ACCC added the primary purpose of issuing a competition notice was to stop and prevent anti-competitive behaviour in the marketplace. The declaration of the wholesale line rental service now allowed those ends to be served, the regulator said.

An abuse of power
A statement issued by Telstra this morning claimed the ACCC's decision to lift the competition notice showed an "appalling abuse of power" on the part of the regulator.

"The ACCC never had a case against Telstra," the statement said. "Telstra gave the ACCC two months warning in advance of the price changes (made in November 2005) at the centre of the dispute, and the ACCC raised no concerns at the time."

The statement went on to claim that it "wasn't until SingTel Optus lobbied [ACCC chairman] Graeme Samuel to prosecute Telstra" that the regulator applied the competition notice in April 2006 -- five months after the price rise.

"As SingTel Optus and the ACCC worked for months to inflict brand damage on Telstra and intimidate Telstra employees with legal demands to produce e-mails and other documents, the majority of Telstra's wholesale customers quietly negotiated new pricing plans," the statement claimed.

Other telcos affected by the price rise, such as Primus and AAPT, have not pursued legal action against Telstra as Optus has, although AAPT in particular has noted it has been hurt by recent Telstra pricing.

Telstra also took aim against the ACCC's statement that the declaration of the wholesale line rental service obviated the need for the competition notice.

"The ACCC's claim today that it fixed the problem by declaring wholesale line rental is nonsense -- if that's the case, why isn't the ACCC taking Federal Court action against Telstra for damages for the four month period before [August 2006]?" the telco's statement said.

"The fact is the ACCC never had a case against Telstra. It is a rogue regulator that is drunk with power, abusing its power and needs to be reined in."