TPG wades in on Telstra SSU discussion

TPG has issued a scathing review of Telstra’s revised structural separation undertaking (SSU).

The SSU details how Telstra will separate its retail and wholesale arms to level the playing-field in the telco industry. It is a cornerstone of the telco’s $11 billion deal with NBN Co and is vital for the National Broadband Network (NBN) rollout.

After the first version of the SSU was rejected by the ACCC, Telstra resubmitted a revised document.

Even with a number of amendments including an overarching equivalence commitment (OEC) from Telstra, a number of telcos have already expressed their discontent over the new SSU.

TPG has made a late submission to the ACCC regarding the SSU.

Pertaining to the specifics of the OEC, TPG claimed the commitment “will not serve to achieve an outcome that wholesale customers will be placed in a position that they are able to compete with Telstra retail.”

With the OEC, Telstra promises equality in the “supply of regulated services to wholesale customers and comparable services to [its] retail business unit, including price”, according to its revised SSU submission to the ACCC.

Wholesale customers can report breaches of such commitments to Telstra. TPG doesn’t believe this will be effective as it will “continue to promote the delaying and gaming tactics that have been prevalent for the past years”

Self-monitoring by Telstra has been proposed by TPG as a good way that it complies with the OEC.

Telstra has included a number of exclusions in the OEC which, in TPG’s view, gives the telco too much wriggle room. For example, Telstra has stated it will not be required to introduce transfer pricing between its business units, which would include its wholesale to retail division.

This is unfair to Telstra wholesale customers, according to TPG.

“[The SSU should require] the effective price Telstra charges itself for various components of retail services is the price it charges its wholesale customers, so Telstra Retail and each wholesale customer is in a position to compete with equivalent underlying costs bases for regulated services,” the ISP said in its ACCC submission.

TPG also found the term “comparable services” under the OEC particularly troublesome when it comes to Telstra Wholesale’s domestic transmission offerings.

“Domestic Transmission is limited to the 2Mbps Megalink service,” the company said. “TPG and other wholesalers would normally require Domestic Transmission with significantly greater bandwidths than this and using Ethernet as the underlying technology.”

The ACCC is due to make a decision on whether to accept the revised SSU next month.

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