The Australian Competition and Consumer Commission yesterday rejected Telstra's undertaking containing proposed interconnection charges for competing carriers. The commission claimed the charges need to be halved to reach an acceptable level.
Industry players have until February 26 to comment on the ACCC's draft decision, officials said.
Interconnection allows competing carriers access to Telstra's network to provide international and national long-distance calls.
The ACCC announcement follows investigations by National Economic Research Associates (NERA) into interconnection costs, which concluded that "efficient costs of providing interconnection" are less than half the charges outlined in Telstra's undertaking.
Professor Allan Fels, chairman of the ACCC, said: "Halving interconnect charges could reduce the prices of national long-distance calls by up to 15 per cent.
"Telstra's competitors could save up to $200 million. Recent experience shows that competition among carriers in the long-distance market would see most of these savings flow through to consumers through lower prices."
According to Rod Shogren, telecommunications commissioner for the ACCC, Telstra also needs to change some of the terms and conditions outlined in the undertaking.
"Some of the non-price terms and conditions in the undertaking would provide Telstra with too much discretion over how interconnection is provided. This would be likely to further disadvantage Telstra's competitors and reduce the benefits of competition to consumers," Shogren said.
He said the ACCC is looking for the terms and conditions to be "evened up" between Telstra and the other carriers.
Submitted in November 1997, Telstra's undertaking specifies the prices and terms and conditions of interconnection valid until June 1998.
According to Shogren, despite outdated price lists, the ACCC decided to use the undertaking as a guide to the industry and competing carriers which have been negotiating commercial deals with Telstra.