Bully
06-03-2004, 08:36 AM
TELSTRA has been given until Tuesday to resolve a dispute with the competition watchdog over its broadband ADSL pricing, or face fines worth millions of dollars.
The Australian Competition and Consumer yesterday issued Telstra with an Consultation Notice, the precursor to a Competition Notice which provides for a $1 million fine for each day of anti-competitive behaviour, and opens the door for legal action from competitors.
The ACCC's latest investigation of Telstra's broadband pricing began three weeks ago, after Telstra's internet service provider, BigPond, lowered the price of its cheapest broadband product to $29.95 - less than the price it charges hundreds of other ISPs who compete with BigPond in selling broadband to consumers.
The ACCC last week issued Telstra with an formal warning in the form of an Advisory Notice. The telco responded the next day by lowering its wholesale prices by a few dollars to $29.75 ex-GST, but its ISP customers said the discount was not adequate.
A midday meeting between Telstra and the ACCC at the watchdog's Melbourne offices today ended after five minutes when Telstra was informed of the Consultation Notice.
Telstra's group managing director of regulatory, corporate and human relations, Bill Scales, said the ACCC was conducting a "show trial" and had not given the company an opportunity to negotiate or defend itself with imputation tests it had carried out to gauge whether other ISPs could profitably compete.
"The commission has said to us they don't know whether it conforms to the the imputation test. If they don't know that, how do they know whether or not we've broken the law?"
ACCC chairman Graeme Samuel said his door had been ever since concerns were first raised in mid-February, and Telstra had failed to prove it had not acted anti-competitively.
"They know what they need to do is to put material in front of us and engage in a discussion about what is a fair price for wholesale customers," Mr Samuel said.
ACCC general manager for telecommunications Michael Cosgrave said the commission had to act quickly on the evidence to minimise the damage to BigPond's competitors.
Mr Cosgrave said the ACCC wanted to avoid a lengthy dispute over what it believed was a price squeeze, because other competitors could be damaged if it were not resolved quickly.
In 2001 the ACCC issued a Competition Notice to Telstra after months of investigation into an almost identical broadband pricing conflict. That notice led Telstra to drop its wholesale broadband price by 30 per cent, spurring ISPs to begin competing in the previously tiny broadband market.
"If you get to the position there is a price squeeze and you take months and months to get to it, the damage is already done," Mr Cosgrave said.
The Australian Competition and Consumer yesterday issued Telstra with an Consultation Notice, the precursor to a Competition Notice which provides for a $1 million fine for each day of anti-competitive behaviour, and opens the door for legal action from competitors.
The ACCC's latest investigation of Telstra's broadband pricing began three weeks ago, after Telstra's internet service provider, BigPond, lowered the price of its cheapest broadband product to $29.95 - less than the price it charges hundreds of other ISPs who compete with BigPond in selling broadband to consumers.
The ACCC last week issued Telstra with an formal warning in the form of an Advisory Notice. The telco responded the next day by lowering its wholesale prices by a few dollars to $29.75 ex-GST, but its ISP customers said the discount was not adequate.
A midday meeting between Telstra and the ACCC at the watchdog's Melbourne offices today ended after five minutes when Telstra was informed of the Consultation Notice.
Telstra's group managing director of regulatory, corporate and human relations, Bill Scales, said the ACCC was conducting a "show trial" and had not given the company an opportunity to negotiate or defend itself with imputation tests it had carried out to gauge whether other ISPs could profitably compete.
"The commission has said to us they don't know whether it conforms to the the imputation test. If they don't know that, how do they know whether or not we've broken the law?"
ACCC chairman Graeme Samuel said his door had been ever since concerns were first raised in mid-February, and Telstra had failed to prove it had not acted anti-competitively.
"They know what they need to do is to put material in front of us and engage in a discussion about what is a fair price for wholesale customers," Mr Samuel said.
ACCC general manager for telecommunications Michael Cosgrave said the commission had to act quickly on the evidence to minimise the damage to BigPond's competitors.
Mr Cosgrave said the ACCC wanted to avoid a lengthy dispute over what it believed was a price squeeze, because other competitors could be damaged if it were not resolved quickly.
In 2001 the ACCC issued a Competition Notice to Telstra after months of investigation into an almost identical broadband pricing conflict. That notice led Telstra to drop its wholesale broadband price by 30 per cent, spurring ISPs to begin competing in the previously tiny broadband market.
"If you get to the position there is a price squeeze and you take months and months to get to it, the damage is already done," Mr Cosgrave said.