Telstra fights to keep exempted exchanges

Contrary to the views of its competitors, Telstra has argued that exchanges exempt from regulation have "demonstrably exceeded expectations" in promoting competition between telcos.

In August 2008, the Australian Competition and Consumer Commission (ACCC) decided that 248 Telstra exchanges would be exempt from regulation, as long as the exchange service areas (ESA) had three or more unconditioned local loop service-based competitors providing services to 14,000 or more customers.

Earlier this year, when the ACCC mandated that Telstra could charge $16 to its competitors for access to the unconditioned local loop service (ULLS) in most areas, the telco said it would be considering the future of these exemptions.

Then in July, the commission said, after almost three years, that it seemed some of these exchanges were not meeting their exemption requirements. As first reported by Communications Day, Telstra issued a late response last month to the discussion paper outlining exactly why it thinks the exemptions should remain in place.

Contrary to the submissions made by internet service providers such as Optus, Internode and iiNet — who argued that the exemptions served to allow Telstra to squeeze its competitors out — the incumbent argued that the exemptions had increased competition.

"Infrastructure investment — particularly within the 380 ESAs that are subject to the exemption orders — has continued over the past four years. Existing and new access seekers have continued to install DSLAMs (and increase existing DSLAM capacity), deepening and expanding the DSLAM footprint," Telstra said in its submission.

This DSLAM deployment by competitors served to increase competition in those exempt areas, Telstra argued, saying that the average number of ULLS access seekers in each ESA had doubled since 2007 from 2.2 to 4.4.

And the roll-out of the National Broadband Network would not stop competitors rolling out DSLAMs either, Telstra said, pointing to indications from iiNet and Internode that both companies plan to continue investing in DSLAMs in areas where it will make a return before the completion of the NBN roll-out.

Telstra has said that all exemptions should remain in place until 30 June 2014.

The ACCC has said that any changes to exemptions will come into effect as of 30 December 2011.