Telstra wins over regulation, but will consumers benefit?

The Australian Competition Tribunal has announced it will grant regulation exemptions for Telstra's wholesale voice services in metropolitan areas, but questions remain over whether consumers will gain better access to services.

In a statement by the Australian Consumer and Competition Commission (ACCC), the Australian Competition Tribunal has confirmed there is a case for winding back regulated access to Telstra's wholesale voice services in certain areas “when and where competition has sufficiently developed”.

The big question is whether there is enough competition in metropolitan areas.

Twice a year, the ACCC will publish a list of areas where the exemptions will apply. No exemptions will come into effect before the end of next year.

The tribunal has varied the exemption orders made by the ACCC in August and October 2008 in relation to Telstra's supply of the local carriage service (LCS), wholesale line rental service (WLR) and PSTN originating access service.

The ACCC considers whether regulation will promote “the long-term interests of end-users of the carriage services, or services provided by means of carriage services”.

In its WLR/LCS decision, the tribunal noted: "competition is likely to be promoted… if deregulation takes place in a market where… an entrant or small current player has taken, or has the physical capacity and willingness to take, market share from the large or dominant incumbent, by offering end-users a better price product-service package."

Like the ACCC's original exemption orders, the tribunal's orders address a number of common hurdles faced by access seekers in accessing Telstra's underlying network using the unconditioned local loop service (ULLS).

Under the tribunal's orders, an exemption will apply in a particular area if a number of factors are met, including the number of Telstra's competitors already using the ULLS in that area as well as their market share.

The tribunal also affirmed the ACCC's decision to grant an exemption for the PSTN service in five CBD areas.

Telstra submitted exemption applications for the LCS, WLR and PSTN services in certain areas in 2007.

In December 2008, the tribunal rejected Telstra's applications for exemptions for the WLR and LCS services.

In line with the Tribunal's exemption orders, Telstra is still required to provide access to the LCS, WLR and PSTN services in non-exempt areas and in certain circumstances.

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