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Telcos fuming over Telstra access win

The Australian Competition Tribunal's (ACT) decision to wind back regulated access to Telstra's wholesale network has outraged the telecommunications sector.
Written by Liam Tung, Contributing Writer

The Australian Competition Tribunal's (ACT) decision to wind back regulated access to Telstra's wholesale network has outraged the telecommunications sector.

The ACT yesterday issued a statement claiming there was sufficient competition in certain metropolitan areas to wind back regulated access to Telstra's wholesale network in them.

The ACCC will now publish a biannual list of the areas where Telstra will not be obligated to provide access to its competitors. The tribunal's decision was based on the view that competition from internet service providers (ISPs) who had installed their own ADSL equipment at Telstra's exchanges, meant that the ACCC could step away from its role of ensuring Telstra gives access.

"Whether an exemption will apply in a particular area will depend on a number of factors, including the number of Telstra's competitors already using the Unconditioned Local Loop Services in that area as well as their market share," the Tribunal noted.

While Telstra has welcomed the new rules of engagement with its competitors, the decision has been slammed as a joke by the rest of the industry.

"For the exchanges they want to make exempt," Primus boss Ravi Bahtia told ZDNet.com.au, "no one can get in there anyway. [Telstra] either declares them to be full or it takes you 12 months to get in. This whole regulatory arena in Australia is getting more curious by the minute."

Bahtia said the Tribunal was out of touch with the business sector. "They keep handing out rulings based on legal presentations made to them. It is about they talk to business people face to face," he said.

A Telstra spokesperson said, "In granting the exemptions the ACT has recognised the highly competitive market that now exists in CBD and metropolitan areas."

An AAPT spokesperson reckoned the decision meant Telstra could now block its competitors from accessing its exchanges. "[It] concludes that Telstra would be able to refuse supply of wholesale voice services in an exchange where there are three competitors with DSLAMs (ADSL multiplexers), even though none of these three DSLAMs is capable of providing an alternative voice service," a spokesperson told ZDNet.com.au.

Optus' General Manager, Regulatory Affairs Andrew Sheridan, said the decision showed why regulation over Australia's telecommunications sector was in need of an overhaul. "It is hard to see how competition and customers will benefit from this decision," said Sheridan. "It reflects the culmination of a long campaign by Telstra against the current regulations, forcing the Tribunal into a corner on legal technicalities."

Yesterday's decision follows the ACCC's recent change to its pricing principals for access to Telstra's Unconditioned Local Loop Services (ULLS). ULLS enable the provision of so-called "naked DSL" services, promoted heavily by iiNet. The current rate of $14.30 for ULLS access is set to increase to $23.60 in 2011-12.

According to iiNet's regulatory affairs spokesperson, Steve Dalby, the Tribunal's decision yesterday was consistent with the ACCC's recent decision to raise the price of ULL while lowering the price of Line Sharing Services (LSS), and that it would threaten its investments in DSLAMs.

"[The Tribunal] has justified the exemption on the basis that companies like us are providing naked DSL. We're providing a broadband service, and they're saying therefore there is enough competition in the wholesale market to remove exemptions. They're telco services, but they're not the same sort," he said.

"For the last 12 years, the ACCC has been encouraging the use of ULL as a path to full facilities-based competition. Now they're saying you should buy wholesale ADSL and resell it," he said.

Dalby said the new pricing principals, which would only apply where the ACCC intervenes in a price dispute, would damage its naked DSL strategy. The ISP added around 67,000 naked DSL customers over the past 12 months.

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