UPDATED | The ACCC is poised to allow Telstra to stop reselling landline phone services at set rates to competitors in certain areas.

Telstra originally requested exemption from its obligations to wholesale voice services in 371 exchange areas in July last year, as it believed sufficient infrastructure competition existed.

"These obligations date from before Telstra's competitors had their own infrastructure", said Telstra. "Now that our competitors have their own infrastructure in place, this kind of regulation is redundant.

"An exemption means that the prices for these wholesale services will be set through commercial negotiation, not through bureaucratic oversight."

But the ACCC has not given Telstra all it wanted. "The exemptions proposed by the ACCC are not as broad as that requested by Telstra", said the ACCC. "The proposed exemptions cover approximately four million of Telstra's copper lines – over half of Telstra's lines in metropolitan Australia."

The ACCC believes that competitors will instead use Unconditioned Local Loop (ULLS) to offer voice products, with the exchange areas it proposes having "14,000 or more addressable services in operation or four or more ULLS-based competitors (including Telstra)."

The exemption would be granted on the condition that ULLS continues to be available, and would be suspended if an exchange was to become "capped" due to space restraints.

But Telstra competitors attacked the proposal, saying that "a loss of competition, higher prices and poorer services would be the inevitable result". The Competitive Carriers' Coalition said that the ACCC "has produced an illogical, ideologically-driven decision that will give more market power to Telstra, already the most powerful company in any market in Australia."

The CCC specifically complained about Telstra's so-called "blocking" of access to exchanges, and didn't think they would be solved within 12 months. The CCC also said that any new equipment that telcos invest in "will be made obsolete from next year when the Government’s proposed national broadband network is rolled out.

"This means competitors are being forced to either spend money that they will have to write off at a loss, or else withdraw services from some customers. If they don’t, Telstra will simply be able to cut off their access to these customers."

The ACCC is requesting input from the industry on its draft decision, which if finalised would take place over a 12 month transition period.

Links:

• ACCC draft decision  (ACCC, 29 Apr 2008)
• Telstra seeks to cut Optus out of ULL  (Whirlpool, 18 Dec 2007)