The Australian Competition and Consumer Commission (ACCC) is set to decide on whether or not Telstra can go ahead with its acquisition of Adam Internet and its plans to turn it into a Jetstar-like cut-price internet service provider (ISP). Telstra's competitors are making a last minute push to convince the regulator that it would damage competition in the industry.
Telstra, which signed a deal to pick up Adam Internet in October for a rumoured AU$50 million, will turn the Adelaide-based ISP into a national budget broadband company that will target the low-cost sector of the market where BigPond cannot compete — but the company first needs the approval of the competition regulator.
Both Optus and iiNet have already lodged objections to the proposed takeover with the ACCC, stating that Telstra's wholesale arm may offer Adam Internet a lower price for services than it currently offers to its competitors.
In a joint release put out today, iiNet's Chief Regulatory Officer Steve Dalby, Macquarie Telecom's National Executive for Industry and Policy Matt Healy, and Vodafone Australia's General Manager for Industry Strategy and Public Policy Matthew Lobb said that the takeover would hit both the retail broadband market and the wholesale market for backhaul.
"These markets are profoundly important for both the costs to end users of all communications services — broadband, mobile, and traditional voice services — but also for the success of the transition to a competitive national broadband network," the executives said.
The companies were also concerned that Telstra may use Adam Internet to avoid its regulatory obligations under the structural separation undertaking (SSU), which locked into place, as part of Telstra's AU$11 billion deal for the National Broadband Network (NBN), the separation of the company's wholesale and retail businesses.
"We believe that if the ACCC cannot identify that this acquisition would result in a substantial lessening of competition, it is evidence that there is a flaw in the law."
If the ACCC ultimately rejects the Adam Internet acquisition, it is widely believed that Telstra will look to launch its own budget ISP under a different name.