ISPs call for competition notice on Telstra

A group of 10 broadband providers is calling on the ACCC to force Telstra to open up wholesale access to its new ADSL2+ service

A group of 10 broadband providers has called on the Australian Competition and Consumer Commission (ACCC) to take immediate action to prevent Telstra from barring wholesale access to its new ADLS2+ network.

The claim is being led by South Australian-based player, Internode, in conjunction with iiNet, Primus, EFTel, Westnet, Netspace, Adam Internet, Wideband Communications, Network Technology and TSN Communications. The letter, which was dated February 15, was sent to ACCC chairman, Graham Samuels, by Herbert, Geer and Rundle Lawyers acting on the ISPs' behalf.

The broadband providers have accused Telstra of anti-competitive behaviour by not granting wholesale access to its new ADSL2+ broadband network and have called for a competition notice to be issued to Telstra under part X1B of the Trade Practices Act. The group has also requested a re-examination of the declaration of wholesale XDSL services under part X1C of the act in areas where competition for alternative suppliers is not viable.

As previously reported in ARN, Telstra's decision to switch on ADSL2+ retail services across 900 exchanges nationally this month has raised the ire of several of its competitors, who claim the telco is acting uncompetitively by not opening up the network to wholesale access.

The exchanges will give 2.4 million users access to high-speed broadband of 8Mbps-20Mbps. Telstra CEO, Sol Trujillo, said the telco switched on ADSL2+ services after being assured by the new Labor Federal Government that it would not regulate third-party access.

Rival ISPs have highlighted several key areas of concern, the top of the list being Telstra's significant market power around wholesaling broadband services. Other issues include untenably high wholesale transmission pricing, increasing levels of capped exchanges and denial of access or delays for ISPs to install their own ADSL2+ DSLAMs.

"In the longer term, we consider that the Commission needs to assess and consider other options available to address telecommunications competition problems that are demonstrated by the considerable obstacles to access to declared services stemming from Telstra's position both as the incumbent network owner and retail competitor," the ISP said in their letter to the ACCC.

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The full letter to the ACCC can be viewed here.

An ACCC spokesperson refused to comment on the letter or whether the watchdog was considering taking action against Telstra.

Internode managing director, Simon Hackett, said the situation was a serious problem for the broadband sector as well as users. Internode has been in contact with the ACCC and expects to meet staff there next week to discuss the situation further, he said.

"Telstra clearly has a substantial amount of power in the market for wholesale broadband services. We believe that Telstra's decision not to offer wholesale access to ADSL2+ services will lead to a substantial lessening of competition," he said in a statement. "By excluding competitors from wholesale access to its ADSL2+ services, Telstra can lure customer of other ISPs into two- or three-year contracts."

Netspace regulatory affairs manager, Ben Dunscombe, was hopeful that next week's meeting with the ACCC's head staff, including Graham Samuels and Michael Cosgrove, would trigger action.

"This is the clearest case yet where consumers will be ngatively impacted if there is no notice. We will end up with a two-tier broadband economy: those that can afford the extra costs per connection, and those who can't and are relegated to ADSL1+," he said.

The latest calls against Telstra follow years of wrangling between the telco giant and rival ISPs over wholesale broadband services. Back in March 2004, the ACCC slapped a competition notice on Telstra after it launched the first $29.95 ADSL retail plan in Australia. The decision was made after ISPs claimed the cost of ADSL wholesale access was actually higher than the retail pricing Telstra was advertising.

Under the conditions of a competition notice, the ACCC can threaten penalties of up to $1 million for each day a company behaves anti-competitively.