Australian regulator tells Telstra to cap wholesale prices

Telstra announced that it has set up a new cloud computing node on the US east coast

The Australian regulator, the ACCC, has set the prices that Australian incumbent Telstra can charge rivals for wholesale access to its ADSL network. The watchdog said that it has commenced an inquiry into access to the network, and in the interim declared prices that will apply for the next 12 months.

The ACCC has told Telstra that it must allow rivals to use its network in order to improve broadband competitiveness in the county. In a statement the ACCC said that, “Telstra currently retains dominant positions in the markets for both retail and wholesale fixed-line broadband services. Despite the deployment of competitive broadband infrastructure in some areas over the past decade, competition in the supply of ADSL services is not effective.”

The wholesale prices will be AUS$25.40 a month in cities and AUS$30.80 a month in regional and rural areas, plus a capacity charge. From 1 July 2012 the monthly charge per Aggregating Virtual Circuit or Virtual LAN acquired in connection with wholesale ADSL will drop from AUS$45.50 per Mbps to AUS$33.65.

The regulator said that its actions would, “promote the long-term interests of end-users of fixed-line broadband internet services throughout Australia.”

In responses a Telstra spokesman told the Australian publication ITNews that, “Telstra does not believe that market conditions justify increased regulation of Telstra’s copper network at this time. Telstra is assessing the implications of this decision for our business.”

Telstra’s shareholders have overwhelmingly agreed to a deal made last year to sell its fixed line network to the Australian government’s National Broadband Network for AUS$11 billion, and accepting the caps is seen as a necessary move to ensure the sale goes ahead.

Last week the UK regulator Ofcom made a similar move, forcing Openreach, the wholesale division of incumbent BT, to lower its wholesale prices.

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