Telstra ordered to pay Optus, TPG costs in ACCC case

The Federal Court has added insult to injury by ordering Telstra to pay its rivals’ legal costs after its failed attempt to prevent the ACCC from slashing the price it can charge wholesale customers for use of its legacy copper.
Written by Corinne Reichert, Contributor

Telstra has been ordered to pay the legal costs of rival telecommunications providers TPG, Optus, Macquarie Telecom, Telcoinabox, and Symbio in its Australian Federal Court proceedings against the Australian Competition and Consumer Commission (ACCC)'s final access determination (FAD) on wholesale copper pricing.

After receiving submissions from all parties, Justice Foster determined that Telstra should pay their costs despite Telstra arguing that all of their cases had merely repeated each other in court.

"I am not persuaded that there was necessary or unreasonable duplication in the way in which the respondents conducted themselves," Justice Foster said in handing his judgment down on Thursday afternoon.

"Of necessity, there was some repetition but, in all the circumstances, it did not rise to the point of being undue repetition. I reject Telstra's submissions to the contrary."

Justice Foster said it was necessary to have all parties in the matter, and that they did not waste the court's time.

"In my view, this is not an occasion for being unduly parsimonious or nit-picking towards the access seekers in respect of costs. Their participation in the proceeding was, in truth, necessary. Their conduct was, at all times, reasonable and appropriate," Foster J said.

"Telstra's concerns that the participation by the access seekers in the proceeding might delay or add unduly to the costs thereof never came to fruition."

The Federal Court had last month handed down its decision in favour of the ACCC, with the judgment reaffirming the regulator's decision to cut the prices that the telecommunications giant can charge wholesale customers for use of its legacy copper network during the transition to the NBN by 9.4 percent.

"Telstra has failed to show that the ACCC committed any reviewable error in the course which it took," Foster J said a month ago.

"At best, the grounds of review advanced by Telstra rise no higher than impermissible review of the merits of the ACCC's decision and impermissible attacks on methodologies employed by the ACCC which were plainly open to it.

"I propose to dismiss Telstra's application for judicial review."

Justice Foster said at the time that if the other respondents wished to seek costs from Telstra, they must make their applications by April 4.

"All of Telstra's grounds of review address the same essential issue ... that part of the ACCC's decision which removed from the calculation of the allowable revenue under the BBM [building block material] such of the increased unit costs of supplying the declared services as resulted from NBN-induced under-utilisation or redundancy of assets," Foster J added.

"It was open to the ACCC to excise these particular costs from the calculation of revenue under the BBM."

Telstra said it was disappointed with the outcome, and will review the court's decision prior to considering its options.

"We believe without the fixed principles being binding, there is less certainty for businesses like Telstra in planning future investments," a Telstra spokesperson added.

The court's judgment was handed down more than a year after arguments were made by Telstra, TPG, Optus, and the ACCC during the hearing in early March last year.

During the trial, Telstra had argued that the ACCC's decision to slash wholesale prices will prevent it from recovering "substantial" depreciation and maintenance costs associated with the copper network.

During the first six months of the current financial year, Telstra said the FAD, along with the ACCC's mobile terminating access service (MTAS) decision, impacted Telstra's income by AU$400 million. Telstra's overall net profit of AU$1.8 billion was down by 11.8 percent for the half year.

During the hearing, TPG and Optus had argued that the regulator ignored neither its own principles nor the impact of NBN in making its wholesale fixed-line pricing decision.

The rival telecommunications providers had argued in court that none of Telstra's suggestions on how the ACCC should have made its pricing decision were backed up by statute, and that it had been Telstra's decision in the first place to enter a AU$11 billion definitive agreement (DA) to sell off its copper network to NBN.

Optus added that the ACCC had in fact directly addressed the NBN in its pricing considerations.

Optus and TPG joined the regulator's court case against Telstra at the end of 2015, having agreed with the ACCC's draft decision in June. The Competitive Carriers Coalition (CCC), formed by Australia's non-dominant telcos, also subsequently joined the case.

Despite being the first respondent to the case, the ACCC did not make any arguments of its own during the hearing, simply saying that it backed the statements of TPG, Optus, and the CCC.

The new prices came into effect on November 1, 2015, and will remain in place until June 30, 2019.

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