Telstra admits to exchange access deception

Telstra has admitted to the Federal Court that it rejected requests for third parties to install equipment in telephone exchanges across the country where space was found to have been available.

Court documents viewed by iTnews confirmed speculation raised Wednesday in the Australian Financial Review that Telstra would "plead guilty" to allegations levelled by the Australian Competition and Consumer Commission (ACCC). 

The competition watchdog had alleged Telstra failed in its obligation to give competitors access to main distribution frames within Telstra's telephone exchanges.

Armed with evidence from ISPs such as iiNet, the ACCC alleged that there was capacity available, or access that could have been made available, on Telstra's main distribution frames in areas where it had denied access to third parties.

The documents revealed that Telstra told wholesale partners certain exchanges were "capped" - or unavailable for use - when the incumbent was reserving the space for its own use. 

It was only after an audit of each exchange that Telstra found the space available.

Seven Telstra exchanges from around the country were used by the ACCC to test whether Telstra had misled wholesale partners. These included an exchange in Bulwer (Perth, Western Australia), Carlton (Melbourne, Victoria), Northcote (Melbourne, Victoria), Paddington (Brisbane, Queensland), Port Melbourne (Victoria) South Perth (Western Australia) and St Peters (Adelaide, South Australia).

Telstra admitted in a defence filing dated July 31 that it had "engaged in conduct that was misleading or deceptive, or was likely to mislead or deceive, contrary to section 52(1) of the TPA (Trade Practices Act)."

Section 52(1) of the TPA states that "a corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."

The carrier also admitted that it had "contravened section 152AR(5)(c) of the TPA and thereby contravened a condition of its carrier license and subsection 68(1) of the Telecommunications Act."

Section 152AR(5)(c) of the Trade Practice Act compels access providers, if requested by access seekers, to "permit interconnection of those facilities with the facilities of the service provider for the purpose of enabling the service provider to be supplied with active declared services in order that the service provider can provide carriage services and/or content services."

Contravention of subsection 68(1) of the Telecommunications Act can result in fines of up to $10 million per instance. Other contraventions of the act can result in a $250,000 fine per breach.

Telstra also admitted that published Capped Sites Notices on the Telstra Wholesale web site were incorrect.

Steve Dalby, general manager of regulatory affairs at iiNet said the ISP had information - including photographs of certain Telstra exchanges - that showed space was available within the seven exchanges Telstra originally claimed were full to capacity.

"It was quite clear to us that there was space in the main distribution frames they [Telstra] claimed to have capped," Dalby said. "We have access to exchanges and provided Telstra with photographs of available space within those exchanges," he said.

When Telstra was informed the ACCC would take legal action on the matter in March, it claimed the issues had already been resolved.

"The ACCC has consistently campaigned for greater powers to meddle in the telecommunications industry," said David Quilty, Telstra's Group Managing Director Public Policy and Communications on March 19. 

"Taking court action a year after this issue was resolved is a clear demonstration of what is wrong with the current regime and the way it is administered," he said.

Telstra will front the Federal Court on October 2 to continue the case.