Telstra slammed for breaches to structural separation undertaking

Telco says it's working to close gaps in retail and wholesale policies

Telstra has come under fire by a government regulator and a coalition of competitors for apparent breaches of the telecom giant’s Structural Separation Undertaking (SSU).

In an annual report on Telstra SSU compliance tabled in Parliament, the Australian Competition and Consumer Commission (ACCC) revealed that Telstra breached the terms of its SSU on “a number of occasions” in the 2012-13 financial year.

Telstra failed to properly secure protected information from Telstra Retail employees, the ACCC said.

This data included confidential or commercially sensitive wholesale customer information provided to Telstra in its capacity as access provider of regulated services.

Also, Telstra violated the SSU when it introduced enhancements to its retail ADSL broadband service without providing the same upgrades to its wholesale service, the ACCC said.

Separately, the Competitive Carriers Coalition (CCC) condemned Telstra for another equivalence issue.

Telstra this month identified a “potential issue” resulting in instances where its retail tests showed that Telstra itself could provide ADSL service even though the wholesale tests used by its competitors showed ADSL could not be provided.

This effectively prevented certain customers from receiving ADSL service from anyone except Telstra.

“The potential issue arises as [service qualification] systems and processes for Telstra Wholesale customers search the current path used by the PSTN service, whereas the search for Telstra Retail also searches alternate paths,” Telstra Wholesale group executive Stuart Lee explained in a letter to wholesale customers dated 9 May.

“This means there is the potential for some limited instances where Telstra Retail may have been able to supply an ADSL service where Telstra Wholesale requests have shown that the ADSL or LSS (line sharing service) is unavailable as the current path for the PSTN service suffers from excessive transmission loss.”

Telstra said it was still investigating the issue and had reported it to the ACCC as a possible equivalence issue under the SSU. Telstra said it had also submitted a proposal to rectify the problem to the regulator.

“However, we believe the instances in which this has occurred are low.”

ACCC action

The ACCC is working with Telstra to stop and prevent future improper conduct identified in the annual report. The ACCC is also working to minimise detriment to Telstra wholesale customers, it said.

“Telstra has responded to these matters in a positive manner and is remediating its systems and processes to ensure it meets its SSU commitments in future,” the ACCC said.

ACCC Commissioner Cristina Cifuentes said the finding of SSU violations highlights the importance of the SSU.

“The breaches identified in this report are examples of the perennial competition issues arising from Telstra’s vertical integration and demonstrate the importance of the SSU to ensure equivalence and transparency until structural reform of the telecommunications sector is realised.”

In a statement, Telstra said it was happy for the feedback.

“The ACCC has reported on some gaps in our systems where access to wholesale customers’ information could be better protected,” it said. “We proactively identified these gaps ourselves and we are investing significantly in our systems to close them.”

Telstra stressed that the security gap identified by the ACCC had not been exploited.

“The report includes no evidence to suggest our retail staff have used wholesale customer information to gain an unfair commercial advantage.”

Also, the telco said that it delivered equivalent services between retail and wholesale most of the time.

“Last year we had more than 100 million interactions with our customers and end users on the Telstra network and we performed very well in delivering equivalence across all these interactions,” it said.

“Nonetheless, we acknowledge the gaps in our systems and are working to fix them.”

Competitors outraged

Competitive telcos represented by the CCC disagreed with Telstra’s claim that there was only an occasional problem with line tests wrongly reporting wholesale ADSL service was not available.

The CCC said the admission confirmed years of repeated complaints from CCC members.

“Telstra has finally admitted that it has been rejecting applications for broadband from customers who wanted to use anyone but Telstra, simply because it was not testing their lines properly,” a CCC spokesman said.

“By contrast, if the order came from Telstra Retail, surprise, surprise, a more thorough test was applied. As a result, consumers were told they could not get broadband from a competitor, but told they could get it from Telstra.”

The CCC said it is waiting to hear from the ACCC on the matter.

“This is further evidence of the importance to deliver genuine structural separation of the access network by ensure that the NBN is owned and operated completely independently of any retailer,” the CCC spokesman said.

“It is also crucial that the ACCC demands Telstra remedies this unfair treatment quickly, and not in six months as Telstra proposes.”

Adam Bender covers telco and enterprise tech issues for Computerworld and is the author of dystopian sci-fi novels We, The Watched and Divided We Fall. Follow him on Twitter: @WatchAdam

Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia

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Tags regulatorywholesaleretailregulationCompetitive Carriers Coalition (CCC)structural separation undertaking (SSU)telecomTelstracompetitionAustralian Competition and Consumer Commission (ACCC)

More about Australian Competition and Consumer CommissionAustralian Competition and Consumer CommissionTelstra Corporation

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