Telstra told to cut wholesale prices 9.4% after losing Australian court case

Telstra will have to cut wholesale access prices to its Australian copper network by 9.4% after a court rejected its bid to raise prices by 7.2%.

The Australian Competition and Consumer Commission (ACCC) told Telstra in 2015 that it should cut prices, but the telecoms operator appealed. Now the Federal Court of Australia has rejected Telstra’s bid for a judicial review.

Telstra wanted to put up prices for access to the copper network as many operators are moving services to the equal-access National Broadband Network (NBN), which provides fibre to the cabinet or premises.

ACCC chairman Rod Sims welcomed the decision: “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 regulator explained: “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 appeal judge, Lindsay Foster, backed the ACCC view: “In circumstances where one network is being progressively replaced by another independently owned network, the ACCC will naturally wish to consider how to promote competition on the remaining parts of the old network while also promoting competition in connection with a new network.”

Telstra threatened to take the matter further. An official told The Australian newspaper: “We are disappointed with this outcome. We believe without the fixed principles being binding, there is less certainty for businesses like Telstra in planning future investments, We will review the court’s decision in more detail before considering any further options we may have.”

The case focused on seven wholesale services: unconditioned local loop service; line sharing service; fixed originating access service; fixed terminating access service; wholesale line rental; local carriage service; and wholesale ADSL.

The ACCC said its final access determinations in 2015 required a one-off uniform decrease of 9.4% in access prices from previous levels for the seven declared fixed line access services. The prices were set to apply from 1 November 2015 until 30 June 2019. 

Sims pointed out that Telstra was receiving payments when customers are moved from its copper network to the NBN. “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.”

He added: “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.” 

Correction, 30 March: Telstra informs us: "We have been charging the reduced prices since 1 November 2015 when the original ACCC decision came into effect."