Telstra takes ACCC to High Court

update Telstra has signalled it will challenge regulatory constrictions enforced by the Australian Competition and Consumer Commission (ACCC) in Australia's highest court.

update Telstra has signalled it will challenge regulatory constrictions enforced by the Australian Competition and Consumer Commission (ACCC) in Australia's highest court.

"The ACCC has set wholesale broadband prices at record new lows that are far beneath the company's actual costs, meaning the subsidies funded by Telstra's shareholders will have to rise yet again," Telstra's group managing director of Public Policy & Communications Dr Phil Burgess said in a statement issued to the Australian Stock Exchange this morning.

"Telstra has a legal and ethical duty to challenge this in the High Court, because the Australian Constitution guarantees every citizen the right to fair compensation when their property is compulsorily acquired, as is happening in this case," he continued.

Telstra is challenging the ACCC under clause 51 (xxxi) of the Constitution, which deals with such just compensation. The telco claims costs of selling wholesale broadband services (such as copper wire, fuel, labour and vehicles) have increased, but the ACCC has not modified its stance on wholesale pricing accordingly.

The lawsuit will also touch on the telecommunnications access provisions of the federal Trade Practices Act.

In the statement, Burgess took particular aim at an ACCC decision announced just before Christmas last year.

"The most recent decision of the ACCC ... allows Telstra's competitors to buy broadband infrastructure for just AU$3.20 a month and then re-sell it for around ten times that amount, forcing our shareholders to pay money from their back pockets to fund largely foreign-owned competitors," the Telstra executive wrote.

The statement said Telstra had written to its wholesale customers to inform them that existing pricing arrangements would remain in place while the High Court case proceeds.

In a press briefing held after the statement was issued, Telstra's group general counsel Will Irving said Telstra's situation was comparable to the ACCC forcing a private citizen to rent out a room in their house -- and then setting the price at AU$17.70 a month.

Burgess claimed it was "impossible" for Telstra to achieve "a fair result" under the current framework set by the ACCC.

Irving said the legal case was likely to drag on until at least the end of 2007. Telstra would invest a little more than a million Australian dollars in the proceedings, he said.

The general counsel added any question of potential compensation for Telstra's claim was some time away from being addressed.

Burgess also addressed the issue of who Telstra's network truly belonged to.

"It's a furphy, put about by Telstra's competitors, that Telstra's shareholders received the gift of the network from the taxpayers of Australia," he said.

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"The fact is, the taxpayers of Australia have been repaid billions of dollars, over AU$70 billion dollars, for the network that was once owned by the government."

"The assets of Telstra are now fully in the hands of shareholders. And they must have access to their constitutional rights of fair compensation."

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