US Gov wants Telstra to play nice

The US Government has weighed in on Telstra’s business practices and has promised to keep an eye on its impending sale.

In its annual US Trade Representative’s (USTR) telecommunications trade agreements report, the US governemnt flagged Australia among several countries to watch based on its existing practices and prospective concerns relating to restrictions on access to leased lines.

The report noted the Australian Parliament decision to sell its remaining stake in the Telstra, a development the United States strongly supports.

“This effort, however, has stimulated a widespread domestic debate about Telstra’s willingness and ability to continue its role as a universal service provider without this governmental stake,” the report said.

The USTR also felt Telstra has been aggressive in attempting to undermine the authority of consumer watchdog, the Australian Competition and Consumer Commission (ACCC).

This had mainly been through direct appeals to the Department of Communications, Information Technology, and the Arts (DCITA) for regulatory relief, the report said.

“To date, the DCITA has deferred to the ACCC on pricing decisions [but] Telstra has worked actively to minimise the scope of safeguards designed to ensure that it offers competitors access to key parts of its networks on terms equivalent to those Telstra offers itself (operational separation) and to curb reforms concerning the structure and level of pricing for unbundled local loops – wholesale inputs that competitors have begun to use to compete against Telstra in local voice and data markets," the USTR said.

"Telstra has asserted that it can only maintain its policy of uniform retail pricing in Australia if wholesale rates are also set uniformly.”

As for operational separation, the DCITA recently rejected Telstra’s initial plan to implement operational safeguards as insufficient.

“Whether Telstra will improve upon this plan in a meaningful way remains to be seen,” the USTR said.

When it cames to unbundled loops, Telstra had refused to lower rates it previously offered on a de-averaged basis, as the ACCC proposed. Telstra had also unilaterally set a high, nationally averaged rate, arguing that it needs to cross-subsidize rural services with above-cost urban rates, according to the report.

“The likely effect of this new tariff, if Telstra’s appeal to the DCITA succeeds, will be to preclude competition based on unbundled loops in the geographic areas that competitors want to serve," it said. "Given the effects on competition of Telstra’s proposed average rate, Australia should consider other mechanisms to address rural service issues, such as expanded use of a competitively-neutral universal service fund.”

The USTR would monitor the DCITA’s efforts to ensure that Telstra implements an effective operational separation plan and would encourage Australia to adopt reforms concerning the structure and level of pricing for ULL to create a more competitive market.

Supporting the USTR's views, two Telstra competitors have recently complained to the ACCC about access to it's ULL lines.

Primus disputes Telstra’s unconditioned local loop service and Amcom has claimed the telco giant over charges for connection and disconnection to its line sharing services.

Telstra was unavailable for comment.

Optus representatives said it was advocating for cheaper ULL lines it was on record about ULL pricing for sometime. However it didn't want to comment on what the USTR have reported.