Competition watchdog highlights concerns

The Australian Competition and Consumer Commission (ACCC) has taken another swipe at Telstra’s wholesale broadband pricing, claiming the telco is still not providing its wholesale customers with sufficient sales margins to sustain competition.

Speaking at the Australian Telecommunications Summit in Sydney last week, ACCC comm­issioner, Ed Willett, said Telstra’s dominance over networking infrastructure continued to pose serious challenges for all of its telecoms competitors. Willett highlighted access to the local loop and line sharing services as ongoing concerns for the broadband industry.

Willett’s comments follow the watchdog’s decision to retain its competition notice against Telstra, served in March. This was despite the telco’s subsequent changes to its wholesale broadband pricing structure.

By enforcing the competition notice, the ACCC is eligible to seek penalties from Telstra through action in the Federal Court.

The maximum penalties for contraventions of the competition rule includes $10 million for each contravention and $1 million for each day the anticompetitive practice continues. The notice is valid for a period of 12 months.

The competition notice also allows ISPs affected by the anti-competitive behaviour to seek damages and compensation while the notice is in force.

“The notice was issued ... because Telstra’s wholesale customers were being prevented from, or hindered in, supplying broadband services to retail customers at prices that enabled them to compete with Telstra,” Willett said.

“While it is entirely proper for Telstra to chase more customers by cutting prices, our very strong view is that its dominance over the local loop must not be used improperly to dominate the retail broadband market and squeeze out its competitors.”

Willett said the ACCC had looked at a variety of regulatory restraints and conditions it could impose upon the broadband industry, but was wary of instigating end-to-end regulatory control.

“We are mindful that doing so could result in long-term regulatory dependence that may stifle or delay the move towards more sustainable long-term competition,” he said. Instead, the ACCC would rely on the Trade Practices Act to address anti-competitive issues.

But while Willett was critical of the incumbent’s wholesale practices, the ACCC would not stop Telstra competing vigorously within the telecoms space, he said.

“What we do want, however, is to see more effective competition between Telstra and other providers in a way that provides their customers with better and more affordable services,” he said.

Willett also announced the ACCC’s latest Snapshot of Broadband Deployment report, which found a total of 829,300 Australians were now using high-speed services.

According to the new report, high-speed services take-up increased by 130,600 connections in the three months to March this year — the highest recorded growth rate since the inception of the report in July 2001. This was proof of the impact lower retail prices had had upon take-up, the report stated.

DSL continued to prove the most popular access technology, with 532,500 users now subscribed to a form of DSL. In contrast, 283,300 users had opted for cable services.

The figures were good news for the broadband industry in terms of mass market adoption, but were not indicative of the strength of competition, Willett said.

“Growth in the broadband market does not necessarily mean that sustainable competition is improving,” he said.

On the contrary, Telstra national communications manager, Rod Bruem, said the figures were proof that the competition notice was not needed.

“Broadband take-up is booming — it doesn’t seem appropriate the ACCC maintain the competition notice,” he said.

Bruem said the telco found it hard to comprehend what the motivation was for retaining the notice. “The majority of our customers who are not fighting a political fight are signing wholesale deals,” he said. “These have been backdated to the price cuts.”

Bruem said Telstra would continue to partake in ongoing discussions with the ACCC on the matter. But the ACCC had still not provided Telstra with any specific guidance on what changes it need to make.

“There is a growing liability under the notice,” he said. “As this grows, it adds pressure on us to take action.”

Bruem said Telstra may consider a legal avenue in order to challenge the notice.