Telstra has lost its Federal Court appeal against a ruling by the competition regulator, the ACCC, that it drop its fixed line access prices by 9.4%.
Telstra had sought a review by the Federal Court of the Australian Competition and Consumer Commission's application of its pricing methodology in making its determination, claiming that the ACCC’s pricing decision would lead to under-recovery of costs from its supply of declared fixed-line services.
The Court rejected all of Telstra’s grounds of review.
While Telstra has expressed disappointment at the Court’s findings, the Coalition of Competitive Carriers (CCC), which has been a vocal critic of Telstra’s court action, said the Federal Court’s rejection of Telstra’s attempt to overturn an ACCC ruling on prices for its "monopoly services shows yet again that Telstra’s willingness to use the courts to undermine industry certainty, even when it has the flimsiest case”.
{loadposition peter}“Telstra’s appeal of the ACCC’s decision – made after a two-year inquiry – has cast a shadow over the industry for more than a year,” CCC chairman Matt Healy said.
“Competitors had to deal with the potential for multi-million dollar back payments to Telstra if the Court had accepted Telstra’s technical legal arguments that the ACCC’s decision had been administratively flawed.”
According to Healy – a Macquarie Telecom executive - the Federal Court’s rejection of Telstra’s case still comes at the expense of millions of dollars in time and money to competitors and the courts.
“At a time when the Parliament is considering watering down competition law protections in the telecommunications industry, this could not sound a louder warning about the dangers of giving Telstra any more advantages at the expense of competitors and consumers,” Healy said.
“At issue in the case was whether Telstra could shield from ACCC consideration the impact of the billions of dollars the Government and NBN agreed to pay it under its renegotiated NBN deal to buy or retire parts of its legacy copper network.
“Telstra was, in effect, asking for a multi-million dollar double dip,” he said.
In its determination of Telstra fixed line access pricing, the ACCC considered that users of Telstra’s network should not pay the higher costs that result from fewer customers as NBN migration occurs.
And, the Commission said that if there were no adjustment for these higher costs the customers who have not yet been migrated to the NBN will ultimately pay significantly higher prices for copper based services.
The ACCC said it took that approach because it considered that users of the fixed line network have not caused the asset redundancy and under-utilisation caused by the NBN and will not be able to use those assets and capacity in the future.
“The ACCC considered that it would not be in the long-term interests of end-users for these costs to be allocated to users of the network who do not cause them, given that Telstra had an opportunity to be compensated for these costs,” ACCC chairman Rod Sims said.
“The ACCC’s determinations meant that the remaining users of Telstra’s network shouldn’t pay higher costs due to a shrinking customer base on the copper network as others migrate to the NBN.
“The ACCC considered that Telstra had an opportunity to be compensated for such costs under its migration arrangements with NBN Co, and is receiving payments for customer disconnections.”
Sims said the Court has recognised that ACCC decisions involve evaluating a range of competing factors, “and that our role as the regulator is to consider all relevant information to arrive at an outcome that will promote the long-term interests of end-users”.
“Today’s decision will help provide some predictability and stability in access prices over the four-year period of the determination while the NBN rollout is completed.”
In a final slap at Telstra, the CCC’s Matt Healy said the court case showed again the “inequity in the industry, and the importance of protecting competition in telco markets while Telstra continues to display such a contumelious attitude toward competitors and regulatory decisions it doesn’t like”.
“Delay and uncertainty is itself a win for Telstra because its market power and profits are so massive that it can afford to litigate matters even when its case is tissue thin,” Healy said.