Telstra steps back on independent adjudicator

Telstra has moved to share dispute resolution powers evenly between the ACCC and a separate adjudicator to quell concerns that the latter might play in the incumbent's favour under structural separation.

The Independent Telecommunications Adjudicator (ITA), first proposed by Telstra itself in 2009, is a new body separate to the Australian Competition and Consumer Commission (ACCC).

It is designed to help resolve non-price equivalence and service-level concerns arising from the separation of Telstra's wholesale and retail divisions.

The adjudicator has remained a sticking point among Telstra's competitors, leading the Federal Government to legislatively mandate the adjudicator's independence from Telstra.

The mandate gives the ACCC the right to approve appointments to the adjudicator.

Telstra appeared willing to quell any further concerns over the arrangement, proposing this week to provide the ACCC with "parallel power" to the adjudicator. [pdf]

The proposal, it said, would effectively give competitors recourse to both bodies in the event of a dispute.

The parallel power proposal would also "provide a powerful incentive for Telstra to ensure that the person to be appointed as the [adjudicator] is credible, well qualified and truly independent".

The ACCC and adjudicator would be able to direct Telstra to change systems or processes to resolve a dispute.

The ACCC would be given the power to determine its own procedures and fees for resolving disputes.

Telstra sought to limit the potential charges imposed by the independent adjudicator to $1 million a dispute or $10 million total over the course of a year.

Telstra also offered the ACCC an opportunity to determine future pricing for Telstra's wholesale ADSL product as well as a billing dispute mechanism allowing service providers to refer arguments over reference pricing to either the ACCC or adjudicator.

The ACCC's head of communications Michael Cosgrave told a parliamentary hearing last week that there were significant continuing issues with Telstra's structural separation undertaking, though it remains unclear when a revised version of the document will be submitted.

Any "material" changes to the undertaking could force a second shareholder vote, despite overwhelming approval at Telstra's annual general meeting earlier this month