Competition watchdog looks to end Telstra's CBD exemptions

Telstra would lose exemptions from regulation of its wholesale fixed-line services in CBD locations under a proposal from the Australian Competition and Consumer Commission (ACCC).

The ACCC today published two reviews of the regulation of transit networks and fixed-line services. In light of the rollout of the National Broadband Network, the ACCC was seeking to understand whether Telstra's copper network and the transit networks should remain declared services with overview from, and price controls put in place by, the regulator.

The report into Telstra's copper network proposes that the declarations over unconditioned local loop services (ULLS), line sharing services (LSS), and wholesale line rental should continue for at least the next five years, and that the CBD exemptions that have existed for Telstra for WLR and local carriage services in Sydney, Melbourne, Brisbane, Adelaide, and Perth should be removed.

Optus had argued for the removal of the exemptions, stating that it is uncompetitive for telcos to compete for enterprise and government business where Telstra has a 75 percent market share. Telstra argued that there is sufficient competition in the sector and such low reliance on its wholesale services in the CBD to leave the exemptions in place without damaging competition.

The transit review also proposed to extend existing declarations for another five years, but suggested a changed methodology to figure out whether a particular route is competitive. A competitive route is one that has three independent fibre providers close to a Telstra exchange, and with connectivity to a CBD exchange service area.

As a result of the changed methodology, 112 metro exchanges and eight regional routes would be removed from regulation, but three other unregulated regional routes would now be re-regulated.

Submissions are open on both draft reports until February 14.