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Telstra loses unbundled local loop Court challenge

Telstra's attempts to challenge the regulatory regime which allows its rivals to access its network were dealt a blow today, after the High Court dismissed a case brought by the telco -- but questions remain over whether the ruling will apply to any future fibre-to-the-node network.
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Written by Jo Best on

Telstra's attempts to challenge the regulatory regime which allows its rivals to access its network were dealt a blow today, after the High Court dismissed a case brought by the telco -- but questions remain over whether the ruling will apply to any future fibre-to-the-node network.

The court decided that the current access regime does not amount to a compulsory acquisition of Telstra's assets, as the company had asserted in its case against the Commonwealth, the ACCC and 11 other ISPs.

Telstra said that local loop unbundling, which grants rival ISPs access to Telstra's copper, had seen its shareholders' property taken over without fair compensation. The telco has repeatedly alleged that it is forced to provide wholesale access to its competitors at below cost price.

"[Telstra's] rights were always subject to a statutory access regime which permitted other carriers to use its assets. Telstra had always owned and operated the assets within a regulatory regime by which other carriers have the right to connect their facilities to Telstra's network and to obtain access to Telstra services," the court said in its ruling.

Telstra has about 10.1 million local loops and about 5,120 local exchanges.

Telstra group general counsel Will Irving said the decision will mean less investment in infrastructure and discourage rivals from building-out their own networks.

Irving said Telstra's legal action, which cost some AU$1 million, was "not a waste of time".

"We believe we had a legal and ethical duty on behalf of our shareholders to have the matter tested in the High Court... In the grand scheme of things, it's a small amount compared to what was at stake," he concluded.

Irving noted, however, that there is no guarantee the ruling will apply to any future network assets the company may build, including a fibre-to-the-node (FTTN) network.

"It's a very high burden on any investor looking to risk capital ... There must be investment certainty up front" on how the ruling will apply to FTTN, Irving continued. He reiterated, however, the company intends to take part in the FTTN tender process.

The government last week requested Telstra provide details about its copper networks, with a view to providing it to rival companies tendering to build the network.

While Telstra agreed to comply with the request, it said it will be putting some investment on hold until the tender process is over.

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