A Competition Notice issued to Telstra by the Australian Competition and Consumer Commission has resulted in significant price reductions of more than 30 per cent for some acquirers of Telstra's wholesale broadband ADSL* services.
However the ACCC remains concerned that the changes may not yet go far enough to allay concerns of anti-competitive conduct. The ACCC will now keep the Competition Notice in place and seek further information from the industry to ensure more widely available price reductions are implemented to overcome the price squeeze between Telstra's wholesale and retail prices and ensure planned network upgrades are delivered.
Telstra's wholesale broadband ADSL services, which enable high speed Internet access over the existing copper network, have been the subject of a Competition Notice** from the ACCC since September 2001. Today the ACCC decided to vary the Notice and give Telstra until mid March to bring about further promised pricing and network changes.
"Prior to the ACCC taking action, most small businesses and residential users had little prospect of choice of who provided their high speed Internet access", ACCC Chairman, Professor Allan Fels, today said. "The ACCC believed this lack of choice was due to Telstra's anti-competitive conduct. Telstra was put on notice about these concerns and is now in the process of negotiating significant wholesale price reductions. Telstra has also committed to further network changes which, if delivered on time, will see more diverse wholesale product offerings early next year.
"These likely price cuts are encouraging, as are the further changes that Telstra has committed to. However, the full impact of these changes on the level of competition amongst high speed Internet service providers will take some time to play out. Accordingly, the ACCC has decided not to revoke the Notice but rather extend the time available for Telstra to amend its conduct before it is potentially exposed to significant penalties".
In related industry developments, the ACCC has welcomed recent announcements concerning Telstra's copper line sharing trials. This initiative, together with the ACCC's mandating of access to the copper network and growth of facilities-based competitors, now provides those wishing to offer broadband services to customers a range of options across cable, satellite and DSL technologies.
"Anyone who uses the Internet from home or for small business stands to benefit from increased competitiveness amongst high speed Internet providers", Professor Fels said. "Such competition should mean greater availability of services to a greater range of users as new competitors vie for customers. It is encouraging that Telstra has taken steps to address the concerns that the ACCC spelt out in the Competition Notice.
"Obviously reductions in Telstra's wholesale prices are likely to lead to increased competition amongst providers of high speed Internet services however it is still too soon to say whether the steps being taken by Telstra will relieve the ACCC's concerns about anti-competitive conduct".
Telstra moved to reduce its wholesale ADSL prices last week. The ACCC believes this has occurred as a result of the Competition Notice being issued.
"Although Telstra moved on its prices before the November 30 deadline set by the Notice, the ACCC intends to keep the Competition Notice in place, in part to ensure Telstra sticks to its timelines for further wholesale service improvements".
The Competition Notice, issued in September this year, gave Telstra 12 weeks to change its conduct relating to the supply, structure and configuration of its ADSL wholesale services in order to allow other Internet service providers to effectively compete with its retail BigPond Internet service.
* ADSL - Asymmetrical Digital Subscriber Line - uses the copper wire network to enable a broadband service to be delivered via a dedicated line from the customer home to a telephone exchange. ADSL is a high bandwidth 'downstream' service, coupled with a lower bandwidth 'upstream' service. Typically, such asymmetric services are well suited to Internet access and services like Interactive TV where more data is going to the customer than is being sent by the customer.
** If the ACCC has reason to believe that a carrier or carriage service provider has engaged or is engaging in anti-competitive conduct, it may issue a Competition Notice under section 151AKA of the Trade Practice Act.