ACCC to Telstra: Don't sabotage DSLAM rollouts

Telstra has been warned by the Australian Competition and Consumer Commission (ACCC) not to sabotage attempts by rival Internet service providers to roll-out their own hardware in Telstra exchanges.

Speaking at the annual Australian Telecommunications Users Group conference, ACCC Chairman Graeme Samuel said: "It is imperative ... that Telstra's competitors have timely and efficient access to exchanges in order to enable them to roll-out service to the mass market." He added that "Telstra has been slow to improve processes to enable large-scale roll-outs and has not demonstrated a real commitment to changing its systems to meet these needs."
Making the ACCC's position clear, Samuel said: "I can assure you the Commission will not look lightly on any attempts by Telstra to impede or hinder competition, for example by slowing the roll-out of DSLAMs [Digital Subscriber Line Access Multiplexers], and is prepared to deal accordingly with any such behaviour. We are now actively considering a number of options available under the Trade Practices Act and our other powers to expedite industry outcomes."
The ACCC announced its plans to make variations to its '2003 Model Core Services Terms and Conditions Determination' for the unbundled local loop services (ULLS) and said it would apply the Determination to line sharing services (LLS) where appropriate. This would, according to Samuel, set out the ACCC's position on a number of specific issues and send "a clear signal to Telstra".

Speaking more broadly about the recent wave of DSLAM rollouts by various carriers, Samuel said that "Increased infrastructure roll-out would allow competitors to provide a much higher quality, and more diverse range of broadband and other services than is possible by simply reselling the Telstra wholesale ADSL service. There is clear potential, for example, for full video services to be provided over DSL technologies."

Samuel reiterated the comments of what he said were a number of commentators, who have "pointed out the potential for an incumbent to engage in non-price discrimination or 'sabotage' to kill off this competition before it even gets a foothold by, for example, raising the cost of accessing essential inputs."

And now is the time for the ACCC to be vigilant: "The potential for sabotage is especially pertinent in light of recent concerns raised by competitors contemplating the mass roll-out of unbundled local loop services (ULLS) and line sharing services (LSS)," said Samuel.

According to the chairman, the industry has already been talking to the ACCC about problems. Samuel told the audience that "some of the complaints raised directly with the Commission include the prospect of significant delays and associated costs in gaining access to Telstra exchanges. The Commission notes that the current ULLS provisioning processes are ill-suited to addressing these concerns within the context of a rapid mass-market DSLAM deployment."

With respect to Telstra's position on the threat that alternative exchange hardware may pose to its existing business model, Samuel referred to comments from Telstra chief executive officer Ziggy Switkowski that were published in February 2005 in the Financial Review.

"The CEO noted," said Samuel, "that Telstra had developed 'mitigating strategies' to address the increasing prospect that competitors will seek to roll-out their own DSL networks. This reference to 'mitigating strategies' could potentially be interpreted in a sinister fashion."

"However Dr Switkowski has assured me that what Telstra had in mind was the launch of more attractive products for its wholesale customers. It remains to be seen which interpretation is ultimately proven to be the correct one," he finished.

The ACCC this week released two discussion papers regarding the revised Telstra ULLS and LSS undertakings.