Telstra to plead guilty on access dispute

Telstra is expected to plead guilty today to breaching its obligations to provide competitors access to its copper network.

The telco is expected to make the rare admission of guilt today in the Federal Court in Melbourne, according to the Australian Financial Review. In March, the Australian Competition and Consumer Commission (ACCC) launched proceedings against Telstra for refusing its competitors such as Primus, Internode, iiNet and Optus access to seven of its metropolitan exchanges.

The competition watchdog claimed Telstra had breached access obligations under the Trade Practices Act which requires it to provide access to its exchanges.

The ACCC had alleged that Telstra misled and deceived access seekers about there being a lack of capacity on its main distribution frames (MDF) — a key component of an exchange used by ISPs to interconnect DSLAM (Digital Subscriber Line Access Multiplexer) equipment to the copper wires running to customer homes.

iiNet's submission to the ACCC in support of the watchdog's case against Telstra included evidence relating to a Telstra exchange in South Perth. The ISP's regulatory affairs spokesperson Steve Dalby said the exchange had been congested with heavy duty cables that should have been removed after Telstra replaced them with fibre. The cables had previously been used to connect other exchanges or datacentres, but were not used to service homes.

"It turned out, in South Perth, that some big heavy-duty cables that were still terminated on the MDF had been replaced years earlier with optic fibre," said Dalby.

"Telstra had replaced the old copper cable with a fibre, but never removed copper cable from the frame. In other words, they were taking up space but were not being used," he said.

Others understood to have provided evidence to the ACCC included Primus, Internode and Optus. Although the ACCC's case had focussed on seven exchanges, around 30 were being contested by access seekers.

David Forman, executive director of the Competitive Carriers Coalition said an admission of guilt by Telstra would vindicate its members' past allegations. Forman called for Telstra's wholesale and retail businesses to be separated.

"In the past when we're alleged these things, some of the responses from Telstra have been quite vitriolic in attacking us for even suggesting such a thing," he said.

"That it went to court really indicates that existing regulatory arrangements are not equipped to deal with this effectively, which underlines the fact that the government's response to the regulatory review has to deal with separating Telstra's wholesale and retail businesses," he said.

Telstra's group managing director Public Policy and Communications David Quilty defended the company's approach to access in March and claimed it had voluntarily fixed access problems a year ago.

"There was an issue and we fixed it — without the involvement of the ACCC. Since we fixed the problem a year ago, the ACCC has not once suggested it had problems with our new processes," Quilty said.

Telstra declined to comment until the directions hearing was held in court.