Telstra has rejected a claim by Optus that its wholesale services should be regulated nationally to ensure that others can compete in the enterprise and government areas.
The rejection came in response to the Australian Competition and Consumer Commission (ACCC) review of the regulation of six different components of Telstra's fixed-line wholesale services. In part, the ACCC is seeking to determine whether in light of the National Broadband Network (NBN) rollout, the regulation is still required.
Telstra's competitors have unsurprisingly argued that the regulation is still required, because the NBN rollout was too slow and had negligible impact on the continued reliance on the copper network.
Telstra in its initial submission argued that it needed regulatory certainty and that due to the level of competition already in the industry, there was no need to expand existing regulations to areas such as CBD locations, where competition is already deemed to be decent enough to warrant declaration of the services unnecessary.
Optus pointed out in its submission that the CBD exemption should be removed because Telstra has 75 percent of the market share in the corporate and government (C&G) segment, proving that it is uncompetitive.
"C&G customers require consistent national connectivity, requiring access seekers to utilise Telstra's resale services outside their network footprints," Optus argued.
"C&G customers have large premises within the CBD areas that require access seekers to utilise Telstra's resale services, and capacity constraints at CBD exchanges make it difficult for access seekers to provide additional services using ULLS [Unconditioned Local Loop Service]."
Telstra has beefed up its enterprise and government division, which most recently became the Global Enterprise and Services division under Brendon Riley, as part of the company's push into Asia.
Telstra already views the division as one of the most important for future growth of Telstra, but in a follow-up submission, Telstra said it "strongly disagrees" with Optus calling for the removal of CBD exemptions to improve competition in the enterprise and government arena. Telstra argued that it is a highly competitive segment already, pointing to the recent AU$530 million contract win for Optus with ANZ Bank.
"This suggests that the current CBD exemptions are not adversely impacting competition in the enterprise and government market segment," Telstra said.
Telstra said it believes there is a relatively low level of reliance on its resale services in the CBD, and capacity constraints are not an issue, with reports from Telstra's exchange facilities over the past six months indicating that there had not been any queuing within CBD exchanges.
The company said that corporate customers are better off accessing a ULLS service from a Telstra competitor, rather than a wholesale line rental from that competitor through Telstra because the fault guarantee was four hours versus six hours.
"Customers in CBD areas — whether in the enterprise and government, small business, or consumer market segments — have undoubtedly benefited from the competitive environment that has developed, through alternative infrastructure providers and product and service innovation," Telstra said.
"Telstra urges the commission not to jeopardise the benefits that have accrued and that can be expected to continue to develop in the absence of regulation."