Telstra fined $18.5m for exchange access

Telstra has been fined $18.55 million by the Federal Court for breaching its carrier license and the law by refusing to allow ISPs access to its exchanges.

The long-running court battle with the Australian Competition and Consumer Commission (ACCC) concluded with Justice John Middleton's decision today.

The ACCC and at least one competitor, Optus, welcomed the decision.

Telstra was found to have refused to allow ISPs to install DSLAM kit in seven metropolitan exchanges.

The telco had claimed the main distribution frames in the exchanges were "capped" when there was still capacity available.

"The conduct occurred during a critical time of DSL-based broadband growth," ACCC chairman Graeme Samuel said.

"Telstra had both the incentive, and the ability, to prevent access seekers from deploying their own equipment.

"The purpose of access obligations is to encourage downstream competition for the benefit of consumers.

"The failure to comply with those obligations impedes that competition and therefore harms consumers."

The fine meted out by the Federal Court was less than the $40 million penalty sought by the Australian Competition and Consumer Commission (ACCC).

Justice Middleton fined Telstra $26.5 million in total but gave the carrier a 30 percent discount for its "cooperation, acceptance of responsibility and for implementing a compliance program."

But he found Telstra had shown "no true remorse [for its conduct], nor an appreciation of the seriousness of the admitted contravention."

He was particularly critical of Telstra's compliance policies, finding that from 2006 to 2008, "Telstra took no steps to develop a culture of compliance with its access obligations under the Trade Practices Act and the Telecommunications Act.

"The admitted contraventions demonstrate substantial non-compliance by Telstra with its legal obligations," Justice Middleton said.

Optus director of government and corporate affairs Maha Krishnapillai welcomed the decision.

"Telstra has a very real ability to act unfairly under the present regulatory system, however the damage is done long before Telstra faces any penalties for its actions," he said.

"This result shows that without full, transparent and independently assessed structural separation Telstra will have an ongoing opportunity to seek to significantly damage competition to benefit its own agenda, in this case stopping broadband competitors accessing Telstra's local exchanges."