[LINK] ACCC issues competition notice

[Kimberley Heitman]

http://www.accc.gov.au/content/index.phtml/itemId/486528/fromItemId/142

ACCC issues advisory notice to Telstra over Bigpond broadband plan

"The Australian Competition and Consumer Commission has issued an Advisory
Notice* to Telstra in relation to the pricing of Telstra.s broadband
internet service", ACCC Chairman, Mr Graeme Samuel, said today.

The Notice follows Telstra's recent announcement of a retail price drop
for its broadband plans. The ACCC has received a large number of
complaints that these prices are below Telstra.s wholesale rates for the
same services. The ACCC is expediting its investigation of whether
Telstra's pricing amounts to  anti-competitive conduct in breach of the
telecommunications specific provisions in the Trade Practices Act 1974.

"The ACCC is very concerned that Telstra's price drop for its retail price
was not matched by a similar reduction in its wholesale price for similar
services", Mr Samuel said. "Competitors of Telstra's BigPond broadband
service, who buy wholesale broadband services from Telstra, complained to
the ACCC that without a reduction in Telstra's wholesale rate, it was
impossible to match Telstra's new low price on a sustained basis. The
inability to compete, especially at the important entry level end of the
market may also ultimately foreclose more sustainable access-based
competition at a vital stage of broadband growth in Australia".

The ACCC was only advised of Telstra's new retail prices very shortly
before they were announced publicly, less than two weeks before they were
planned to come into effect on Friday 27 February 2004. It has issued an
Advisory Notice while it continues to investigate whether Telstra has
breached the Act with the aim of preventing the irreparable damage to
competition that anti-competitive conduct may inflict. The Advisory Notice
advises Telstra of the action it should take in order to ensure its does
not breach s.151AK of the Act. Section 151AK of the Act provides that a
carrier or a carriage service provider must not engage in anti-competitive
conduct.

In the Notice, the ACCC has advised Telstra to reduce its wholesale prices
to a level below Telstra's retail prices that would allow Telstra's
wholesale customers to provide retail broadband services at prices which
do not substantially hinder or prevent them from competing with Telstra.

"This notice is a strong warning to Telstra to change its conduct so as to
avoid any contravention of the competition rule.  A reduction in Telstra's
wholesale prices will facilitate increased competition among broadband
providers with the end goal being lower prices and better deals for
consumers in the long term. The Advisory Notice does not preclude the ACCC
from issuing a competition notice or taking such further enforcement
action as it considers necessary. Telstra will need to closely consider
whether it implements its planned retail price reductions, or alternately
reduces wholesale prices for its competitors".

The Advisory Notice is effective immediately and will apply unless revoked
by the ACCC.

Apart from the competition concerns, the ACCC is also very concerned about
the impact on consumers of the megabyte usage limits on many broadband
plans. For instance, under Telstra's $29.95 per month plan, consumers are
allowed to use up to 200 megabytes per month, and will pay 15 cents for
every additional megabyte.

"The ACCC is concerned that megabyte usage limits could be reached
quickly, especially by consumers who are new to using broadband service",
Mr Samuel said. "Consumers should beware of the substantial additional
costs they could face for usage of their broadband service or for exiting
the plan early before they sign-up on a long-term broadband plan".

The ACCC urges customers, particularly those new to high speed broadband
services, to regularly monitor their usage. Before signing-up for a
long-term contract, consumers may wish to consider that in the event of
wholesale price reductions as advised by the ACCC, an increased range of
retail offerings may become available to them.

*Under section 151AQB contained in Part XIB of the Act, the ACCC may issue
a written notice to a carrier or carriage service provider advising the
carrier or the provider of the action it should take, or consider taking,
in order to ensure that it does not engage, or continue to engage, in
anticompetitive conduct.

The notice is online at
http://www.accc.gov.au/content/item.phtml?itemId=486441&nodeId=file403d1b0421989
&fn=Advisory%20Notice%20February%202004.pdf

Kimberley Heitman,
President, WAIA

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                        Kimberley James Heitman
http://www.kheitman.com/                         kheitman at kheitman.com
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