ACCC cannot accept Telstra’s separation undertaking
- 30 August, 2011 15:30
The Australian Competition and Consumer Commission (ACCC) has cast doubt on the future of Telstra’s deal with NBN Co, stating that the telco’s structural separation undertaking cannot be accepted in its current form and important changes are required.
“The preliminary view is that the structural separation undertaking that has been provided does not address legislative requirements,” ACCC chairman, Rod Sims, said in a statement.
Sims said that while the ACCC was seeking a solution to the impasse, the preliminary view of the competition regulator was that Telstra’s undertaking had a number of issues, such as not having a compliance plan to meet Telstra’s commitment to be structurally separated from 2018 — a mandatory requirement established in the separation legislation. “The ACCC’s main area of concern, however, relates to the adequacy of Telstra’s proposed interim equivalence and transparency measures,” he said.
The ACCC’s initial view is there needs to be a clear and enforceable commitment to an ‘equivalence of outcomes' that enables wholesale customers and Telstra’s retail businesses to gain access to key input services of equivalent quality and functionality.”
The ACCC also had “serious concerns” about arrangements between Telstra and NBN CO that include the parties’ ability to vary the arrangements without further scrutiny by the ACCC.
In a discussion paper on Telstra’s Structural Separation Undertaking and draft Migration Plan, the ACCC said that the interim equivalence and transparency measures are not supported by a clear and enforceable commitment to an ‘equivalence of outcomes.’
These outcomes would enable wholesale customers and Telstra’s retail businesses to access key input services of equivalent quality and functionality.
Further, that agreements subsequently negotiated between Telstra and NBN Co could potentially gain the benefit of a legislative authorisation — exemption from competition laws — without undergoing further ACCC scrutiny.
The provisions against Telstra promoting wireless services as substitutable for NBN Co’s fibre services and the limitation on Telstra’s ability to provide HFC services to new channel providers also militated against the ACCC accepting the undertaking.
The ACCC’s preliminary view — subject to submissions from interested parties — on the draft migration plan submitted by Telstra was that it did address all of the statutory criteria required.
Telstra in an ASX statement said it would work with the ACCC to resolve the issues it had raised with a view to gaining approval prior to the company's 18 October AGM. Telstra would also push ahead with its shareholder vote regardless of achieving ACCC acceptance.
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