Telstra appeals wholesale voice service ‘red tape’ ruling

Telstra’s lawyers will appeal a determination by the Australian Competition Tribunal that overturned an ACCC ruling to release the carrier from specific wholesale local voice service regulations.

Telstra Group General Counsel, Will Irving, today said the Tribunal had ‘misinterpreted the tests that apply’ in deciding whether the Australian Competition and Consumer Commission’s decision made in August last year relating to the regulations would be followed.

He also said the Tribunal had not taken into account ‘the substantial evidence of real competition in metropolitan areas’.

“Telecommunications competition in metropolitan and suburban Australia is intense, with some areas having eight or more competitors with infrastructure in their exchanges, providing wide choice for consumers and businesses,” said Irving.

“This level of competition alone should be enough to show it is possible for other competitors to set up business and compete for customers without requiring regulated access to resale services – a position that was supported by the ACCC when it made its decision.

“The Tribunal is effectively saying it is safer to keep regulating than to let competitive forces operate,” said Irving.

Telstra lodged two applications back in 2007 seeking exemption from its standard access obligations (SAOs) in relation to the supply of wholesale line rental (WLR) and local call service (LCS) in 371 metropolitan exchange service areas (ESAs).

The carrier is said to have lodged two further applications later that year seeking exemption in a further 16 metropolitan ESAs.

The ACCC granted in August 2008 what it called ‘a limited exemption’ in a sub-set of ESAs in which there were 14,000 or more addressable services in operation or four or more unconditioned local loop service (ULLS)-based competitors (including Telstra).

The decision was said to be subject ‘to a number of conditions and limitations’.

“Specifically, the conditions and limitations sought to address the impediments with the capping of exchanges by Telstra, lengthy queues to enter into Telstra's exchange buildings and service disruptions when migrating from the line sharing service (LSS) to the ULLS,” the ACCC said in a statement late last year.

The ACCC said that the rationale for granting the exemptions ‘was that access regulation should focus on those elements of the fixed-line network that continue to represent enduring bottlenecks’.

These refer to a network element or facility that exhibits natural monopoly characteristics and is "essential" to providing services to end-users in downstream markets, the ACCC said.

The Tribunal, however, did not adopt the ACCC's reasoning, according to ACCC Chairman, Graeme Samuel.

"The ACCC recognises that this decision was a matter of judgement and understands that there are reasons why the Tribunal came to a different conclusion,” said Samuel.

“As with all court and Tribunal decisions, the ACCC will review those reasons and consider the implications for the ongoing performance of its regulatory functions.”