ACCC sues Telstra for blocking rivals

The competition watchdog is taking Telstra Corporation to court, accusing
Australia's biggest telecommunications company of blocking rivals from accessing its
crucial copper wire network.
Following the announcement, shares in Telstra fell seven cents, or 2.31 per cent, to
close at an all-time low of $2.96 on Thursday.
The Australian Competition and Consumer Commission (ACCC) said in a statement it had
begun proceedings in the Federal Court in Melbourne because Telstra had refused
requests by other phone and internet providers for interconnection at seven key
metropolitan exchanges.
Telstra claimed there was no capacity available on the main distribution frames, but
the ACCC said capacity was available, or could have been made available.
The news added to the other troubles affecting the Melbourne-based company.
Telstra shares have slumped 28 per cent since December 12 last year, the last
trading day before the federal government excluded the company from the national
broadband network process.
In late February the telco said that full year earnings would be lower than expected
and announced that chief executive Sol Trujillo would leave at the end of June.
During Thursday's trading session, 165.7 million Telstra shares changed hands, 1.3
per cent of the total on issue and the highest volume since December 15, the day the
Telco was excluded from the government's broadband process.
Telstra managing director for public policy and communications David Quilty said the
ACCC action related to a small number of inadvertent process issues that the company
fixed a year ago.
He said the ACCC move was a "complete waste of court time and taxpayer money".
"Since we fixed the problem a year ago, the ACCC has not once suggested it had
problems with our new processes," Mr Quilty said in a statement.
This "is a clear demonstration of what is wrong with the current regime and the way
it is administered".
Australia's third biggest internet service provider, iiNet, said the ACCC action was
further evidence of Telstra's anti-competitive behaviour.
"Telstra's actions continue to hamper competition, reduce investment by competitive
carriers and create blockages to innovative product delivery," iiNet chief
regulatory officer Steve Dalby said.
Mr Dalby said the ACCC action demonstrated the need for the government to proceed
with the operational separation of Telstra and the national broadband network,
whomever builds it.
As part of the conditions of its carrier licence, Telstra is required to give its
wholesale customers access to its network at the same quality and in the same time
the telco provides itself.
That means companies such as Optus, the second largest telco, and iiNet should be
able to offer the same services Telstra does and in the same amount of time over the
copper network.
Optus, which is owned by Singapore Telecommunications, said the ACCC's action showed
the national broadband network needed to be delivered with clear regulatory
guidelines.
"We need to cut off this monopolist behaviour at the source by implementing
structural separation and giving the ACCC real powers to act," Optus general manager
for regulatory issues Andrew Sheridan said.
Telstra said there had been a huge increase in the number of access seekers, with
1.2 million unbundled local loop (ULLS) and spectrum sharing services now compared
with about 18,000 in 2003.
The ACCC alleges Telstra breached standard access obligations and the access regime,
contrary to the Trade Practices Act and Telecommunications Act, by preventing rivals
from accessing the ULLS and line-sharing service.
"The ACCC is seeking declarations, pecuniary penalties and injunctions," it said.
The ACCC also alleged that Telstra prevented rivals from getting access to
facilities, such as exchanges, which breached the access regime in the Telco Act.
The ACCC alleges that Telstra engaged in misleading and deceptive conduct by telling
access-seekers that certain exchanges were "capped" - having no additional capacity
- whether it was to them individually or on its wholesale website.
The matter has been listed for a directions hearing in the Federal Court on Friday
April 17 before Justice Middleton.