Rivals unhappy with Telstra’s reduced fine for uncompetitive behaviour

The Federal Court reduced a fine to be imposed on telco giant Telstra due to cooperation with the Australian Competition and Consumer Commission, but rival telcos still aren’t happy and say it is just another example of anticompetitive behaviour.

Justice Middleton in the Melbourne Federal Court fined Telstra $18.55 million for denying competitors access to wholesale infrastructure, and therefore breaching its carrier license.

Optus director of government and corporate affairs Maha Krishnapillai said in a statement Telstra will continue to act unfairly even with new regulatory structures.

“This is an example of anti-competitive behaviour from Telstra that the Government’s reform package is designed to stop at its source.”

“Telstra has a very real ability to act unfairly under the present regulatory system, however the damage is done long before Telstra faces any penalties for its actions.”

Internode managing director Simon Hackett also said in a statement that while the company is satisfied justice was fulfilled, “this specific issue is the top of a massive iceberg of anti-competitive and obstructive process delays”.

“The only permanent answer to this class of challenge is structural separation. It is unfortunate that the promised Federal Government legislation designed to drive this outcome has failed to occur. Without it, we remain a country whose broadband outcomes (even in an NBN world) will be dominated by Telstra, to the ultimate detriment of consumers.”

Telstra admitted to the court it had breached the Telecommunications Act by refusing these companies, as well as telcos Primus and PowerTel, access to its exchanges.

While Telstra told its rivals these exchanges were “capped” at full capacity, the court heard there was indeed capacity in these exchanges, or capacity could have been made available.

While the ACCC put forward a $40 million penalty, Middleton announced an initial total penalty of $26.5 million. However, that figure was actually reduced by 30% due to Telstra’s acceptance of responsibility, and for implementing a compliance program.

Gartner vice president Geoff Johnson says while anticompetitive behaviour should always be discouraged, the introduction of the NBN should change that.

“The judge complimented them on their co-operation, they were able to demonstrate there was not a wilful failure, and they had a reduced find. I guess this is history now, because with the NBN ahead of us Telstra’s motivation will be to put as many people on to that network as possible.”

Judge Middleton said in his ruling that Telstra should receive a discount for the “large amount of co-operation, acceptance of responsibility, admission of liability and implementation of a compliance program”.

However, rival telcos may be proven correct in their assessment of Telstra’s response. Middleton said the company expressed “no remorse”.

“Telstra’s submissions in support of [a lower] penalty, and Telstra’s failure to specifically express remorse through its counsel, lead me to conclude that Telstra has no remorse further than accepting responsibility and taking corrective steps,” he wrote in his judgment.

ACCC chairman Graeme Samuel said in a statement the ACCC welcomed the fine and said large telcos need to ensure they always comply with regulations.

“The purpose of access obligations is to encourage downstream competition for the benefit of consumers. The failure to comply with those obligations impedes that competition and therefore harms consumers.”

“The ACCC will continue to vigorously pursue high penalties against corporations that break the law.”