LSS safe from Telstra attack

High Court rules Australians must have access to their taxpayer-built network

Telstra has today suffered a major blow following decision by the High Court of Australia to deny it the capability to set access prices for its network.

The telco launched an appeal against an Australian Competition and Consumer Commission (ACCC) decision earlier this month which ruled Telstra must provide network access to competitors for $3.20 a month.

The High Court refused it's claim that enforced wholesale access is a breach of the constitution, and stated the "access regime set out in the Trade Practices Act did not amount to an acquisition of Telstra's property"

"The argument is synthetic and unreal because it proceeds from an unstated premise that Telstra has larger and more ample rights in respect of the PSTN than it has," the High Court said in a statement.

"Those assets were held by a Commonwealth statutory corporation and had previously been held directly by the Executive Government.

The 1991 laws vesting the PSTN and other assets in Telstra, and establishing a regulatory regime providing for access by Telstra's competitors to Telstra's network and services, were not laws with respect to the acquisition of property."

ACCC chair Graeme Samuel said the decision reinstates that the access regime was designed to preserve the Unconditioned Local Loop Service (ULLS) and Line Sharing Service (LSS) for public benefit.

"Today's ruling provides welcome clarity around the basic regulatory rules which all carriers must abide by," Samuel said.

"[The] ruling removes yet another layer of uncertainty created by the Telstra strategy of continual litigation. It provides welcome encouragement to industry participants using the access regime to continue investments which provide competitive services to end users."

The ACCC previously accused Telstra of double-dipping by charging line access to consumers through standard line rental and ISPs through LSS.

Telstra group managing director Phil Burgess said the decision will dissuade ISPs from investing in infrastructure and labeled the ACCC a "rogue agency".

"Today's decision shows how the law is being used by a rogue government agency, the ACCC, to arbitrarily redistribute the investments of more than one million Australians," Burgess said.

"In some cases this redistribution of wealth means the savings of Australian investors have been handed over to highly-profitable foreign corporations that have no right to be subsidized, least of all by Australian investors."

Group general counsel Will Irving said Tesltra's legal appeal was justified because network costs in Australia are the highest in the world.

"Our competitors now have little reason to invest in their own networks, knowing instead they can simply resell Telstra services," Irving said.

"They can now 'buy' rather than 'build' - a perverse outcome, by any measure.

"We challenged the law because we had a legal and ethical duty on behalf of our shareholders not to stand idly by while the ACCC reduced wholesale prices to some of the lowest levels in the developed world."

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