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Will Telstra get another parking fine?

Key decisions about competition in Australia's telecommunications industry are expected this week.
Written by Renai LeMay, Contributor
commentary The telecommunications industry is keeping a close eye on the nation's competition regulator this week.
Renai LeMay, ZDNet Australia
The Australian Competition and Consumer Commission (ACCC) is widely tipped to be on the verge of resolving two of the industry's thorniest problems.

Telstra and the regulator are reportedly close to inking a deal that would see Telstra commence building the Fibre to the Node (FTTN) national broadband network it put on hold in December.

Telstra temporarily halted building the network due to its belief government regulations would force it to open the fibre-optic infrastructure to rivals as it currently has to do with its copper equivalent.

After several appeals from Telstra to the federal government to change those regulations, it finally appears as if Telstra and the ACCC may be on the verge of a breakthrough.

In a separate development, the ACCC reportedly will soon issue Telstra with a competition notice over the company's December increase of line rental charges to its wholesale customers.

Telcos like Optus, AAPT and Primus have been complaining for months about the line rental increases, with Primus threatening to take the matter to the Federal Court.

The last competition notice issued in the telecommunications sector was over a similar issue on broadband pricing back in March 2004.

At the time most saw the notice as a huge victory for competition in broadband, but six months later the ACCC resolved its issues with Telstra and slapped it on the wrist with what some saw as an AU$6.5 million "parking fine".

"Given the damage that Telstra's conduct caused the industry as it reaped outstanding benefits, the $6.5 million Telstra now has to pay could be characterised as an excellent investment," Primus' regulatory affairs manager Ian Slattery said at the time.

"This demonstrates the failure of the telecommunications competition regime and the need for its urgent rehabilitation before Telstra is unleashed as a fully privatised entity," Slattery said.

Clearly Telstra still sees the ability to control wholesale prices as a competitive advantage, and why shouldn't it? The telco's planned FTTN network also fits into this category.

Realising this, the superficial challenge before the ACCC with both of these issues is how to regulate the giant in a way that will maintain and foster competition.

However the real problem for the regulator is how to avoid being seen as ineffectual by an industry that well remembers the "parking fine" the ACCC issued this time last year. A repeat offence on the part of the ACCC could see more local telcos give up on the regulator and start lobbying the Federal government to intervene.

Will the ACCC fold before Telstra's might or sink the boot into the giant telco? Send your thoughts to renai.lemay@zdnet.com.au.

For more views from the trenches of Australian telecommunications, visit my blog:
Full Duplex

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