The Australian Competition and Consumer Commission has formally rejected Telstra's undertaking into interconnection charges for long distance and international calls, proposing the carrier should cut its prices by half.
Announced yesterday, the decision follows a draft decision in January this year to reject the undertaking based on unreasonable non-price terms and conditions.
According to ACCC Chairman, Allan Fels, Telstra's undertaking, submitted in 1997 suggested an average interconnection charge of 4.73 cents per minute. The Commission has suggested the charges should be between 1.73 to 2.53 cents a minute in 1998-99.
Interconnection allows competing carriers access to Telstra's network for international and long distance calls.
According to officials, the ACCC's assessment of the undertaking is based on the costs that an "efficient" operator incurs when providing these services. It also includes cost reductions over time driven by lower labour costs as well as increases in traffic volume.
"Telstra's proposed charges were double costs when they were submitted and the excess charges over costs is even greater now," Fels said.
According to a spokesperson from AAPT, the carrier has welcomed the decision which will make "huge differences" to its long distance services.