The Australian Competition and Consumer Commission today announced a public inquiry into ISDN and other data services.
The announcement came as the ACCC expressed grave concerns over Telstras conduct in the last four months in relation to ISDN supply and pricing.
Since the ACCC's investigation commenced in late August Telstra has deployed $3.5m of additional infrastructure and substantially reduced its proposed ISDN pricing regime for fixed connections.
The investigation followed complaints from service providers that they faced shortages or complete loss of supply of connections between their networks and their customers' premises over the Telstra ISDN network and that Telstra proposed to drastically increase the price of ISDN access to its competitors.
The investigation focused on XSPCs and OnRamp Xpress. XSPCs are long-held ISDN calls with a fixed charge (also known as 'semi-permanent circuits') which have been progressively withdrawn by Telstra. OnRamp Xpress is the replacement service.
ACCC Commissioner for telecommunications Mr Rod Shogren said, The ACCC investigation uncovered evidence which caused considerable concern. Under the new legislative regime introduced in July 1997 the ACCC would expect a carrier like Telstra, which is withdrawing one product and replacing it with another where that product is a vital input to competitors to do so in a way which doesnt harm competition. There was a very real prospect at the time the Commission commenced its investigation that Telstra was introducing OnRamp Xpress in a way that hindered competition.
The ACCC investigation concluded that soon after 1 July 1997, XSPCs became progressively more difficult for Telstras competitors to obtain. Delays in the launch of OnRamp Xpress meant that no alternative Telstra products were available at comparable prices. Telstra was using an alternative access technology by way of leased digital technology that allowed it to offer its competing managed network services such as National Frame Relay without using XSPCs. In most cases Telstra was not affected by the shortages of supply via ISDN access services.
If it had continued the resultant 'squeeze' could have led to competitors being unable to access services which are needed to connect new customers. The prices being offered to competitors for OnRamp Xpress were as much as 40 per cent higher over short distances than those competitors had previously incurred for obtaining XSPCs.
After the ACCC made Telstra aware of its concerns Telstra:
spent $3.5m on infrastructure to supply XSPCs prior to the release of OnRamp Xpress in areas where OnRamp Xpress is not yet available; and launched a second trial phase for OnRamp Xpress with considerably reduced capped pricing and released final pricing details for that product. Those final prices no longer contain substantial across-the-board increases of the type Telstra informed its competitors they would be facing as recently as September and are considerably lower than initial trial prices.
We will continue to watch developments in this market closely, Commissioner Shogren said. What this investigation does show is the need for urgent consideration of the extent of regulation of the ISDN market under the new telecommunications access regime in Part XIC of the Trade Practices Act.
The Commissions public inquiry into access declarations concerning the data services such as ISDN and digital leased lines commences this week with the release of a discussion paper, Competition in Data Markets.
The way forward for competition in these markets is likely to be a commercially negotiated solution which reflects the underlying philosophy of the access regime. Where services are vital to allow your competitors to meet you in the market you must offer those services at a cost-based price. The public inquiry is aimed at ensuring that this is done in a way which promotes the long-term interests of consumers and other end-users of communications services.
For further information about this media release: Commissioner Rod Shogren, (03) 9290 1800 Alana Woods, Acting Director Public Relations (02) 6243 1108
The announcement came as the ACCC expressed grave concerns over Telstras conduct in the last four months in relation to ISDN supply and pricing.
Since the ACCC's investigation commenced in late August Telstra has deployed $3.5m of additional infrastructure and substantially reduced its proposed ISDN pricing regime for fixed connections.
The investigation followed complaints from service providers that they faced shortages or complete loss of supply of connections between their networks and their customers' premises over the Telstra ISDN network and that Telstra proposed to drastically increase the price of ISDN access to its competitors.
The investigation focused on XSPCs and OnRamp Xpress. XSPCs are long-held ISDN calls with a fixed charge (also known as 'semi-permanent circuits') which have been progressively withdrawn by Telstra. OnRamp Xpress is the replacement service.
ACCC Commissioner for telecommunications Mr Rod Shogren said, The ACCC investigation uncovered evidence which caused considerable concern. Under the new legislative regime introduced in July 1997 the ACCC would expect a carrier like Telstra, which is withdrawing one product and replacing it with another where that product is a vital input to competitors to do so in a way which doesnt harm competition. There was a very real prospect at the time the Commission commenced its investigation that Telstra was introducing OnRamp Xpress in a way that hindered competition.
The ACCC investigation concluded that soon after 1 July 1997, XSPCs became progressively more difficult for Telstras competitors to obtain. Delays in the launch of OnRamp Xpress meant that no alternative Telstra products were available at comparable prices. Telstra was using an alternative access technology by way of leased digital technology that allowed it to offer its competing managed network services such as National Frame Relay without using XSPCs. In most cases Telstra was not affected by the shortages of supply via ISDN access services.
If it had continued the resultant 'squeeze' could have led to competitors being unable to access services which are needed to connect new customers. The prices being offered to competitors for OnRamp Xpress were as much as 40 per cent higher over short distances than those competitors had previously incurred for obtaining XSPCs.
After the ACCC made Telstra aware of its concerns Telstra:
spent $3.5m on infrastructure to supply XSPCs prior to the release of OnRamp Xpress in areas where OnRamp Xpress is not yet available; and launched a second trial phase for OnRamp Xpress with considerably reduced capped pricing and released final pricing details for that product. Those final prices no longer contain substantial across-the-board increases of the type Telstra informed its competitors they would be facing as recently as September and are considerably lower than initial trial prices.
We will continue to watch developments in this market closely, Commissioner Shogren said. What this investigation does show is the need for urgent consideration of the extent of regulation of the ISDN market under the new telecommunications access regime in Part XIC of the Trade Practices Act.
The Commissions public inquiry into access declarations concerning the data services such as ISDN and digital leased lines commences this week with the release of a discussion paper, Competition in Data Markets.
The way forward for competition in these markets is likely to be a commercially negotiated solution which reflects the underlying philosophy of the access regime. Where services are vital to allow your competitors to meet you in the market you must offer those services at a cost-based price. The public inquiry is aimed at ensuring that this is done in a way which promotes the long-term interests of consumers and other end-users of communications services.
For further information about this media release: Commissioner Rod Shogren, (03) 9290 1800 Alana Woods, Acting Director Public Relations (02) 6243 1108