Open last mile to Optus, watchdog tells Telstra

Discriminatory access policy likely to hamper long-term efficiency and competition

The Australian Competition Tribunal has rejected Telstra's exemption application to restrict access to its copper network for Optus in areas where Optus has its Hybrid Fibre Coaxial (HFC) cable network. Telstra was ordered that it has an ongoing obligation to provide access to all of its copper network.

According to the Australian Competition and Consumer Commission (ACCC), the tribunal was not satisfied that Telstra's application was likely to promote competition or economic efficiency.

Optus can now seek ACCC determination over the terms and conditions of access to the access services in all areas where they are declared.

The decision affirms the November 2008 decision by the ACCC to reject Telstra's request to be exempted from providing certain regulated fixed line services to Optus.

In December 2007, Telstra lodged an application with the ACCC seeking individual exemptions from the Standard Access Obligations (SAOs) for the supply of the unconditioned local loop service (ULLS) and other access services to Optus for any customer premises within 75 metres of Optus' existing HFC network in Sydney, Melbourne and Brisbane.

The tribunal concluded a discriminatory access policy would “be likely to seriously hamper the achievement of long-term dynamic efficiency and sustainable full facilities-based competition”.

Moreover, a “chilling effect” on investment would result from granting an exemption application which singles out a particular competitor to lose access to regulated services, the tribunal said.

“It is perhaps unsurprising that there are no examples of a discriminatory exemption or forbearance having been granted anywhere in the world,” it noted.

ACCC chairman Graeme Samuel welcomed the tribunal's decision and said that it had confirmed the ACCC's view that a discriminatory access policy would be likely to discourage investment and not promote the long term interests of end-users.

"Telstra's exemption application focused too much on one competitor, rather than on benefiting consumers and competition generally," Samuel said. "The Australian Competition Tribunal's decision affirms that open and equivalent access for all parties is required for effective communications regulation."

The tribunal also found that, since Optus already has incentives to use and invest in its network, forcing Optus into further investment by removing access to Telstra's copper network could lead to an inefficient and “socially wasteful” outcome.

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