The Australian Competition and Consumer Commission (ACCC) has rejected Telstra’s plan to raise the price it charges rivals to access its telecoms network. Today’s regulatory ruling is a body blow to the former monopoly and could hurt its profits and undermine the sale of the government’s 51.8% stake in the telco, presently worth an estimated USD20 billion. The regulator ruled that Telstra’s demands to raise prices on its unconditional local loop service and line sharing services were ‘unreasonable’ and would ‘distort competition and investment outcomes’. The fixed line operator asked to be allowed to charge a flat rate fee of AUD30/month per service to rivals, but the ACCC has rejected this as too high. However, Telstra argues that if is forced to reduce LLU prices below current levels, as per the ACCC’s wishes, it could cost it an estimated AUD800 million in lost revenues per annum.
The latest ruling adds more uncertainty to the state’s plans to sell off the company. The government had been advised to conduct a sale in October or November 2006, but will now decide in the first quarter whether to proceed with its plans. To further muddy the waters, Telstra has put on hold plans to deploy a fibre-to-the-node (FTTN) component on its new AUD10 billion high speed network until it receives clarification on rules governing third party access to that network.