ACCC rejects Telstra ULL undertaking

29 04 2009

The Australian Competition and Consumer Commission (ACCC) yesterday announced it had rejected Telstra’s undertaking to charge competitors a $30 monthly fee to access ULL in metropolitan areas.

The ACCC expressed surprise that Telstra’s $30 application worked out to be higher than the previous proposal of $30 for metropolitan areas, which was rejected in 2006.

ACCC Chairman, Graeme Samuel, said following an extensive assessment of Telstra’s application the ACCC was not satisfied the $30 charge for metropolitan areas is reasonable.

The ACCC believes that Telstra’s proposed price is unlikely to promote competition in the broadband and telephony markets. It may also discourage investment in telecommunications infrastructure. The ACCC also considers that a $30 monthly charge would result in Telstra recovering more than is necessary to promote its legitimate business interest in providing this service,” Mr Samuel said.

In rejecting the undertaking, the ACCC also noted Telstra’s proposed monthly charge was significantly above estimates derived from benchmarking against comparable countries.

This is the fourth time Telstra has submitted applications in regards to the ULLS service. One application was withdrawn while three have now been rejected by the ACCC because they could not be satisfied that the undertakings were reasonable. The two previous rejections were affirmed by the Australian Competition Tribunal on appeal.

The next move is with Telstra, one can only assume that being effectively sidelined in the Government’s NBN construction process, has prompted them to take an tough approach against their competitors who in the absence of the NBN rely on the ULL for service delivery for the short to medium term.

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