Line rental next on ACCC's Telstra list

"The Australian Competition and Consumer Commission (ACCC) received a number of complaints from Telstra's wholesale customers stating that the prices offered by Telstra for the line rental component of its retail fixed line services are below Telstra's prices for the line rental component of its wholesale Home Access service," said the regulator in a statement.

"The ACCC is concerned that Telstra's conduct raises the costs of its competitors in the retail fixed services market and substantially hinders their ability to compete."

Consequently the ACCC has issued Telstra with a "Consultation Notice", which means the company and others have until 27 January next year to respond to the issue. At that point the regulator will decide whether to issue a Competition Notice, signifying Telstra had behaved anti-competitively.

The ACCC's announcement is only one of several it has made in the last several days with respect to Telstra. Yesterday it said it would undertake an inquiry to examine the future regulation of certain fixed network and wholesale services -- including access by rivals to Telstra's copper (known as the Unconditioned Local Loop or ULL).

Samuel today said the Consultation Notice issue did not necessarily mean the ACCC would take action over Telstra's line rental pricing.

The regulator's general manager of telecommunications Michael Cosgrave declined to reveal which telcos had formally complained but pointed out a number had gone public with their issues.

Two examples are iiNet and Primus. While Primus is preparing to sue Telstra over the matter, iiNet has taken the alternate route of passing on an additional AU$3.41 in line rental charges to its customers.

However iiNet has said all of Telstra's wholesale fixed line customers -- for example giants like AAPT and Optus -- are affected.

Telstra's general manager, regulatory, described the ACCC's action in a statement as "mischievous".

"Telstra briefed the ACCC on the increases in late October, but the Commission took over a month to ask any additional questions and now, on the eve of Christmas, announces its intervention in a very public and political manner," said Dr Tony Warren.

"Telstra acted completely appropriately and within the law, and will vigorously defend any subsequent action by the ACCC," he added.

Warren also contended it was misleading to argue it wasn't possible to make a profit on Telstra's line rental product.

"The ACCC has deliberately or naively ignored commercial reality by isolating the price of certain line rental products from the telephone and Internet services that are almost invariably sold with it," he said.