Opening salvo fired in Telstra wholesale pricing dispute

Telstra seeks review of ACCC pricing determination

Lawyers representing Telstra, a group of rival telcos and the Australian Competition and Consumer Commission today appeared in the Federal Court in Sydney in a case that centres on the wholesale pricing of Telstra’s fixed line services.

Telstra is seeking review of an ACCC determination last year that cut the prices of a range of the telco’s regulated fixed line services.

Telstra argued it should be allowed to raise the prices it charges telcos that use the services.

However, the ACCC cut by 9.4 per cent the access prices Telstra can charge for the services, The ACCC’s ruling applies from 1 November 2015 until 30 June 2019.

Telstra’s CEO, Andrew Penn, has previously said the price cut would have an impact in the vicinity of $80 million in FY16.

A number of telcos have joined the case, backing the ACCC.

The court last year granted applications by TPG and Optus to join the case as respondents. In February this year Macquarie Telecom, MyNetFone and Telcoinabox also lined up against Telstra.

As a result of the ACCC pricing determinations, “Telstra's financial and commercial interests are adversely affected in that it will lose significant revenues for its supply of Fixed Line Services over the period of their operation,” the telco argues in its application for judicial review.

Telstra has said that the ACCC erred in its pricing determination.

At the heart of Telstra’s argument is the claim that the regulator made a mistake in its treatment of how the NBN migration will affect the telco’s fixed line services.

Telstra argues the ACCC erred by taking into account the payments Telstra receives under the Definitive Agreements between it and NBN when assessing the ‘costs’ incurred by the telco with loss of economies of scale as people move off the copper network.

The telco believes the ACCC decision does follow the principle that Telstra be given the opportunity to recover the cost of providing services to its wholesale customers.

Telstra is seeking that the ACCC’s pricing determinations be set aside or declared to be void and/or made unlawfully as well as its legal costs.

The telco began its opening submission this morning.

The hearing continues this afternoon and tomorrow.

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Tags Australian Competition and Consumer Commission (ACCC)Telstra

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