Telstra's move to increase network access charges ludicrous, competitors say

Updated

Telstra's competitors have criticised the telco's bid to increase what it can charge for access to its network.

Telstra has asked the Australian Competition and Consumer Commission (ACCC) for permission to raise wholesale access charges by 7.2 per cent, partly because it is losing money as customers switch to the National Broadband Network (NBN).

The move would affect almost every Australian with a phone line or an internet connection, because Telstra owns most of the copper phone lines that other telcos depend on to service their customers.

The company leases about 4 million line services to rivals and has not raised wholesale prices since 2011.

Group executive Telstra wholesale Stuart Lee said the company's recommendation to the ACCC was to allocate the costs between retail and wholesale the same way.

"So we allocate the same unit cost to a wholesale customer as we do to a retail customer," he told the ABC.

"We think that's the way of achieving a fair outcome for all of our shareholders and all of our retail and wholesale customers.

"If you've got a network business and you shrink it, then the fixed costs need to be borne by those customers that are on that network.

"And it doesn't matter whether it's NBN or mobile substitution or anything else, and it's not whether or not the costs in our fixed network will increase, it's whether we're fairly allocating those costs between our wholesale and retail customers."

Telstra's claims unsubstantiated as costs going down: competitor

Optus vice president of corporate and regulatory affairs David Epstein said the proposal meant consumers would be hit with bigger bills.

"And these sorts of things mount up," he said.

"Some people of course require a number of services, people who may, for example, have medical equipment monitoring, people who may have burglar alarms, etcetera, because a lot of those services depend on fixed-line technology that Telstra is asking to charge for.

"A lot of [these services] will [depend on fixed-line technology] for longer than the average service that is going to the NBN because some of these technologies are not necessarily available right away on the NBN."

Mr Epstein said any increase in the wholesale price would be unfair for competitors.

"The fact is that Telstra [is] picking up business in the mobile area," he said.

"I mean a lot of the reason why a lot of people are losing less of these services is because they are adopting alternative technologies, be they mobile or what is known as over-the-top services like WhatsApp and voiceover IP services on the internet.

"Every other company faces that, we face that, some of our other non-Telstra competitors face that. Telstra shouldn't be the only company that's insulated from these forces."

I think the claims are ludicrous. For years our customers have been seeking lower prices on their broadband and this goes against that and against all that's been said in the market already in terms of regulation. iiNet chief executive officer David Buckingham

iiNet chief executive officer David Buckingham described Telstra's proposal as "outrageous".

"I think the claims are ludicrous. For years our customers have been seeking lower prices on their broadband and this goes against that and against all that's been said in the market already in terms of regulation," he said.

"In terms of switching across to the NBN, they're already being paid for that process in terms of the NBN payments they're going to receive going forward as migration occurs.

"In terms of the actual copper network and its maintenance and its ongoing working costs, those are reducing right now and they'll continue to reduce so there's absolutely no reason or a substantiated claim for higher revenue when costs are going down."

Mr Buckingham said customers pay on average $50 per month for broadband.

"So add 7 per cent to that - it will give you an indication."

Move will 'deliver higher prices, reduced competition'

They're making enough money from their monopoly network. This is an unnecessary price change and all it will deliver is less competition, higher prices and less investment in fixed-line services. Vodafone spokesman Matthew Lobb

Vodafone does not rent any lines from Telstra, but the company has also hit out at Telstra's request to raise rates.

Spokesman Matthew Lobb said it would further stifle competition by squeezing the margins for fixed-line players.

"What the industry is saying is enough already. Telstra's already the most profitable telco in the world, it charges some of the highest fixed line prices in the OECD," he told the ABC.

"They're making enough money from their monopoly network. This is an unnecessary price change and all it will deliver is less competition, higher prices and less investment in fixed-line services."

Teresa Corbin from the Australian Communications Consumer Action Network (ACCAN) is concerned that any price increases could have "ramifications" for a number of people connected to the internet.

"I think that what we would find is there would be ramifications across a whole set of communications services, so not just fixed lines, not just internet, but also mobile because people will make decisions based on what they can afford," Ms Corbin told the ABC.

"It's not just whether or not they have a mobile, internet or fixed line, but it's also whether or not they choose a prepaid service and things like that which also limits their use to a certain extent as well.

"To be perfectly frank, we don't have all the details so it's very difficult for us to say that this proposal is a good or bad one.

"It doesn't sound very positive because it's talking about increases and we always get very concerned about any kind of increase, however we want to see what the full details really are.

"Whether or not it relates to customers who are not using the NBN subsidising customers who are, that would be something to be seriously concerned about.

"Over time, we should be able to find out more detail on this and clearly nothing's going to come into place without there being further scrutiny and obviously a lot more information in the public domain so it can be discussed and understood properly."

A draft determination from the ACCC is expected in December.

Topics: telecommunications, internet-technology, regulation, industry, consumer-protection, australia

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