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Telstra defends broadband pricing decision; calls for ACCC to lift competition notice.

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Monday 18 October 2004

Telstra defends broadband pricing decision; calls for ACCC to lift competition notice


MARK COLVIN: It's been a red-letter day at Telstra with Austra lia's biggest telecommunications company signing up its one-millionth broadband customer. 


The milestone was reached despite continuing tensions between Telstra and the competition watchdog over Telstra's broadband pricing strategy. 


The telco earned the ACCC's ire in February when it unveiled a new monthly retail price that was below the fee that it charged its competitors to gain access to its broadband network. 


But today, Telstra says that discount offer has been responsible for igniting the entire broadband market. 


It's demanding that the ACCC drop its investigation. 


As Michael Rowland reports. 


MICHAEL ROWLAND: It may be having trouble dialling up business for its core telephone services but Telstra is striking gold with its broadband network. 


ROD BRUEM: It's a huge milestone. It's come more than a year ahead of what we originally projected. It means that, you know, there are a million Australians now who've moved out of the slow lane and onto the information superhighway. 


MICHAEL ROWLAND: Telstra's regulatory affairs spokesman Rod Bruem says there were 1,000,028 broadband subscribers as at the end of last month. 


People are picking up broadband faster than they are mobile phones or pay-TV, and Telstra has no doubts as to just why the Internet service is proving so popular. 


ROD BRUEM: Oh, there's no doubt that Telstra's decision to reduce prices and make broadband the same sort of price as dial-up back in February has been a huge catalyst in bringing this target forward. 


MICHAEL ROWLAND: In a surprise move in February, Telstra cut its retail broadband charge to $29.95 a month. 


While potential customers might have seen the attraction, Telstra's smaller competitors certainly didn't, as the price was below the fee Telstra charged them to gain access to its expansive broadband network. 


Acting on these concerns the ACCC slapped Telstra with a so-called competition notice, ordering the company to change its pricing plans or face fines of at least $10 million. 


In late March, Telstra did just that, but the competition notice remains in place, much to Telstra's chagrin. 


Spokesman Rod Bruem. 


ROD BRUEM: Well Telstra saw no reason for the competition notice in the first place. And well, the proof is in the pudding as they say. Today's figures show consumers are certainly much better off, and really, that's what the ACCC's primary focus is, consumers. Our competitors are all rubbing their hands together saying, 'thank you very much', and really it's only Telstra's reputation that's suffered. We've been labelled monopolist, quite unfairly we believe. 


MICHAEL ROWLAND: Is the ACCC being somewhat obstinate from Telstra's point of view? 


ROD BRUEM: Well we'd like to see the notice lifted. We can see no basis for it originally, and there's certainly no need for it now. 


MICHAEL ROWLAND: The ACCC's Chairman, Graeme Samuel, sees things rather differently. 


GRAEME SAMUEL: Well the competition notice still sits there, it's been there since the 19th of March of this year. It hasn't been lifted. Our view is that if Telstra is still engaging in anti-competitive conduct with its current pricing structure… 


MICHAEL ROWLAND: And Mr Samuel doesn't see anything particularly significant about Telstra's customer milestone. 


GRAEME SAMUEL: Well of course our concern is not so much with the number of customers that Telstra's got, but rather whether its wholesale customers - that is, its retail competitors - are able to compete with Telstra on a fair basis, given that they are required for the most part to use Telstra's infrastructure, it's a network of copper wires around the country. 


MICHAEL ROWLAND: At least one of Telstra's retail competitors appears to be doing very well. 


Just hours after Telstra's announcement today, Optus revealed it too was enjoying strong broadband customer growth, and now boasts 250,000 subscribers - a sizeable increase but still a long way short of Telstra's magic million mark. 


Graeme Samuel says he hopes to negotiate a compromise with Telstra in the not too distant future. 


GRAEME SAMUEL: Look, I keep on saying we're a few weeks away because I live in eternal hope that this matter will be resolved in the not too distant future. But that is a matter for negotiations with Telstra at the moment. And at the same time we are preparing the necessary material that might be needed if we were to go to the courts. I do hope this can be resolved by negotiation with Telstra. 


MARK COLVIN: ACCC Chairman Graeme Samuels, ending Michael Rowland's report.