The Australian Competition and Consumer Commission has reached an agreement with Telstra resolving the matters raised in relation to the Competition Notice issued on 19 March 2004.
"Following the ACCC's investigation into Telstra's pricing of high speed internet services, Telstra has reduced its wholesale DSL pricing over a period of time with the latest reduction taking effect from 1 January 2005", ACCC Chairman, Mr Graeme Samuel, said today. "In addition, Telstra has now agreed to rebate $6.5 million to its affected wholesale customers".
The ACCC considers that efficient wholesale customers are now no longer hindered from competing with Telstra BigPond's ADSL services on the basis of Telstra's reduced wholesale DSL pricing. Since the ACCC commenced its investigation on 16 February 2004, Telstra has reduced its Metropolitan list price for wholesale 256/64kbps access by approximately 30 per cent, whilst 512/128kbps and 1500/256kbps charges have been reduced by over 30 per cent. In addition, Telstra has collapsed its Regional 1 and Regional 2 wholesale DSL prices, thereby providing all DSL services at Metropolitan rates. The ACCC believes this will increase competition between broadband providers in regional areas.
Telstra has acknowledged that its pricing changes made in February 2004 for its retail broadband services may have adversely affected the competitive position of its wholesale broadband customers. In order to meet ACCC concerns, Telstra has offered its wholesale customers reduced wholesale pricing and rebates.
The ACCC maintains that Telstra's conduct was likely to have been in breach of section 151AK of the Trade Practices Act 1974.
The ACCC's decision to accept the series of measures offered by Telstra to resolve this matter was reached after obtaining senior legal advice and taking account of evidence received from a number of Telstra's wholesale customers, with which the ACCC has consulted extensively about the impact of the conduct described in the Competition Notice.
An important part of the resolution of this matter is the introduction of a safeguard mechanism to prevent the recurrence of similar conduct in the future. The ACCC has put in place a formal arrangement which obliges Telstra to advise the ACCC up to 15 working days in advance of future retail broadband prices and specials. The notification protocol should provide the ACCC with sufficient notice of future BigPond broadband price changes to conduct a preliminary assessment of their likely effect on competition and raise any concerns with Telstra. A copy of the notification protocol will be available on the ACCC's website shortly.
In conjunction with this arrangement, the ACCC and Telstra, using independent expert advice, are engaging in a process for deciding the appropriate retail and wholesale price relativities in the future to avoid any recurrence of the conduct raised in the Competition Notice.
In light of the above, the ACCC does not propose to take any further action in relation to the Competition Notice.