Aussie watchdog slams Telstra ADSL roll-out

Australian telecoms watchdog the Australian Competition and Consumer Commission (ACCC) has released a competition notice against the incumbent telco Telstra, accusing it of anti-competitive activities with the roll-out of ADSL Internet connections.

Quoting the Trade Practices Act, the ACCC says that Telstra's system of supplying DSL to consumers and other businesses is "lessening, preventing or hindering competition".

More precisely, Telstra's wholesale ADSL services, called Flexstream, is "set at a level whereby there was and is only a small positive margin or a negative margin between those prices and the corresponding prices at which Telstra supplied and supplies ADSL services to its residential and small business retail customers."

Telstra also requires its wholesale customers to run its Layer 3 data services and refuses to supply such customers with Layer 2 data services.

Basically, what this all means is that the former monopoly telco is abusing its position, getting in the way of other company and controlling the market by charging a high wholesale fee. It can do this because it owns the local-loop or "last mile" from exchange to people's homes.

ACCC Chairman Allan Fels said: "It is the ACCC's view that Telstra is taking advantage of this ownership in not offering a true wholesale ADSL service but merely 're-badging' its BigPond products and then selling them to competitors at uncompetitive prices."

As such, the ACCC has decided to act. The notice was released on 4 September and will take effect from 30 November, so Telstra needs to come up with something before the ACCC gets angry - which means charge penalties of up Au$10 million and Au$1 million per day.

Now if this all sounds strangely familiar, that's because we are faced with an identical position in the UK with BT overcharging on wholesale DSL and tying companies that buy its offer into aspects of business that help it cement its control.

BT has been cutting the price of its DSL and installation but it is still far above the average in Europe and miles behind high-speed Internet access in the US and Asia. The UK is rapidly slipping behind the rest of the world in terms of Internet access. Aside from the price, many people are being put off by the compulsory 12-month contract for the line. Every company is insisting on this and the argument holds that this is needed since companies don't expect to make a profit until several years down the line.

However, it would appear that BT is imposing the 12-month contracts on its wholesale customers. As such, BT is picking up the best of DSL subscribers for an entire year since its price is the lowest. The only significant exception is Blueyonder - which charges less since it is run over cable, but is restricted to certain parts of the country.

Perhaps Oftel would like to get off its arse and follow the ACCC's example. Behave like a watchdog rather than BT's best friend. It's only seven pages long Mr Edmonds, we're sure you will find it a jolly read. Just click here.

Related Link

ACCC
The competition notice [pdf]