One competitor is enough, says Telstra

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One competitor is enough, says Telstra

Seeks to redefine 'competitive route' rules.

Telstra is hoping to redefine what makes a transmission route 'competitive', believing it could mean having as few as one rival operator present.

The incumbent is lobbying to relax the Australian Competition and Consumer Commission's (ACCC) current capital-regional and inter-exchange criteria used to define a route's contestability.

A transmission route is currently deemed competitive when there are at least three operators, including Telstra, with infrastructure that are vying for custom on it. This is known as the 'three provider' or 'T+2' test.

Competitive routes can — with ACCC permission — be excluded from price regulation.

Telstra cites its own figures — redacted in publicly-facing documents — to show competition has "flourished" since 2009, meaning more regulated routes should be reclassified to exempt.

However, it also believes that the "three provider threshold is likely to be an overly conservative indicator of effective competition" on a route.

"Market evidence suggests that in many cases the initial entry of a competitive provider on a route previously served only by Telstra results in price-based competition," Telstra said in a regulatory submission. (pdf)

The incumbent advocated for the ACCC to consider a 'T+1' test for competitiveness, noting it was already used in New Zealand.

Such a proposal seems unlikely to win much support from the rest of the telecommunications industry.

ISP iiNet said in a submission of its own (pdf) that "the availability of three fibre [transmission] providers is the minimum to represent the existence of competition".

Optus sought more wholesale changes to the regulated pricing regime for transmission routes, arguing that competition in the downstream corporate & government and mobile markets was worse off under the current system. (pdf)

Its problems are more with the way the last iteration of pricing was determined by the ACCC.

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