Telstra labels Optus cable as 'lazy', ACCC intervenes

According to the ACCC both disputes relate to the price paid by Telstra to each Optus entity for the Mobile Terminating Access Service.

The Domestic Mobile Terminating Access Service is a wholesale input, used by providers of fixed-to-mobile and mobile-to-mobile calls, to allow their customers to call mobile phone users. It allows consumers (either fixed-line or mobile) to call mobile users connected to another network. The carrier whose customer initiates the call pays the carrier whose customer receives the call for the mobile terminating access service.

The ACCC has commenced the arbitration process for these access disputes but as the arbitrations are conducted in private, the ACCC will not be making any public comment.

However Telstra has not been shy about making its feelings known to the public.

According to the telco giant, the move forces “SingTel Optus to invest in its lazy and under-utilised cable network by seeking an exemption from providing access to Telstra's networks in the same areas where SingTel Optus has its own cable network”, said Dr Tony Warren, executive director regulatory at Telstra.

“Australia has an absurd policy regime which discourages SingTel Optus from investing in its cable network, which passes 2.2 million homes, or more than one in four Australian residences. SingTel Optus claims that only 1.4 million homes within its cable footprint are 'serviceable' - which is code meaning they don't want to make the investment to connect nearly 40 percent of homes that have cable running past their front door. By comparison, overseas cable networks treat less than 8 percent of their homes passed as unserviceable," he said.

Telstra claims SingTel Optus picks the easy homes to connect to its cable network and then takes a cheap ride on the Telstra network for more complex residences like multi-dwelling apartments.

"Rather than using access to Telstra's unconditioned local loop (ULL) to augment its HFC coverage, SingTel Optus has deployed its ULLS infrastructure right over the top of its cable, covering almost 80 percent of its HFC network," Warren said.

According to Warren, while overseas cable operators are engaged in a "race for speed" with incumbent telcos - offering services with speeds of 50Mbps and 100Mbps - SingTel Optus has only increased its cable broadband service to two-thirds the speed available on Telstra's upgraded cable network.

Telstra has enlisted the support of a leading UK economist, Professor Martin Cave, in its application for the exemption. Cave was one of the first to put forward the "ladder of investment" theory, which has ostensibly been used by the ACCC to justify how it regulates access to Telstra's network.

The theory says that regulated access can be justified at prices that encourage competitors to progressively move towards their own infrastructure (climbing the ladder).

"However, SingTel Optus had already completed deployment of its HFC network before the Commission declared ULLS back in 1999," Warren said.

In his report attached to Telstra's submission, Cave said this behaviour is highly unusual, and that he is not aware of any historical precedent of a network owner choosing to serve customers in its own area on this scale using the incumbent's unbundled loops.

He also pointed out that local network competition will be even more critical as we move toward next generation networks.

Optus has yet to make a comment on the issue.

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