The Australian Competition and Consumer Commission today issued a Competition Notice to Telstra in relation to its customer transfer process (known within the industry as 'commercial churn').
The Competition Notice states that Telstra is engaging in anti-competitive conduct.
'The ability to transfer customers is fundamental to effective competition, particularly in the local and long distance telephony markets,' Mr Rod Shogren, the ACCC Commissioner with responsibility for telecommunications matters, said today.
Telstra introduced the customer transfer process on 4 August 1997. The ACCC subsequently received complaints from industry. Complainants were concerned about the transfer conditions imposed by Telstra, and Telstra's continued refusal to negotiate about those conditions.
The ACCC has issued the notice after conducting an extensive investigation, involving detailed market analysis and industry interviews. Information received by the ACCC that Telstra's transfer conditions substantially hinder the development of local call competition and the further development of long distance competition.
'The ACCC was extremely concerned about the conditions Telstra imposed for the transfer of customers to its competitors. The current transfer conditions have significantly inhibited the ability of telecommunications customers to enjoy the benefits of a more competitive environment,' Mr Shogren said.
'Of most concern to the ACCC were the transfer fees and conditions regarding pre-transfer debt. Unless Telstra's competitors paid an additional fee of $23 per service, they inherited pre-transfer debt owed by the customer to Telstra. In addition, the ACCC was concerned about the complex transfer form which Telstra imposed on its competitors, the time taken to process debt-free transfers and the transfer reject conditions.'
A working group, established under the auspices of the Australian Communications Industry Forum, has been developing solutions to particular customer transfer difficulties for some time. To date, the ACCC has been encouraged by these self-regulatory initiatives. However, the ACCC believes that Telstra is still engaging in anti-competitive behaviour.
The ACCC has consulted with industry participants and has formed the view that issuing a Competition Notice will assist the resolution of customer transfer problems and further the ACCC objectives, especially relating to compliance with the Trade Practices Act 1974 and improvement in market conduct.
'The Australian Communications Industry Forum has made considerable progress in facilitating the development of industry-wide solutions to these problems. The ACCC sees the notice as complementing these initiatives and dealing with matters which remain outside the scope of self-regulatory processes.'
The notice will come into force on 30 September 1998. This gives Telstra sufficient time to cease its anti-competitive conduct.
Should Telstra continue to contravene the competition rule after that date, then it will be liable for damages. In addition, the ACCC is able to seek penalties from Telstra. The maximum penalty Telstra will be liable for is $10 million, plus $1 million per day for each day the conduct continues.
The Competition Notice states that Telstra is engaging in anti-competitive conduct.
'The ability to transfer customers is fundamental to effective competition, particularly in the local and long distance telephony markets,' Mr Rod Shogren, the ACCC Commissioner with responsibility for telecommunications matters, said today.
Telstra introduced the customer transfer process on 4 August 1997. The ACCC subsequently received complaints from industry. Complainants were concerned about the transfer conditions imposed by Telstra, and Telstra's continued refusal to negotiate about those conditions.
The ACCC has issued the notice after conducting an extensive investigation, involving detailed market analysis and industry interviews. Information received by the ACCC that Telstra's transfer conditions substantially hinder the development of local call competition and the further development of long distance competition.
'The ACCC was extremely concerned about the conditions Telstra imposed for the transfer of customers to its competitors. The current transfer conditions have significantly inhibited the ability of telecommunications customers to enjoy the benefits of a more competitive environment,' Mr Shogren said.
'Of most concern to the ACCC were the transfer fees and conditions regarding pre-transfer debt. Unless Telstra's competitors paid an additional fee of $23 per service, they inherited pre-transfer debt owed by the customer to Telstra. In addition, the ACCC was concerned about the complex transfer form which Telstra imposed on its competitors, the time taken to process debt-free transfers and the transfer reject conditions.'
A working group, established under the auspices of the Australian Communications Industry Forum, has been developing solutions to particular customer transfer difficulties for some time. To date, the ACCC has been encouraged by these self-regulatory initiatives. However, the ACCC believes that Telstra is still engaging in anti-competitive behaviour.
The ACCC has consulted with industry participants and has formed the view that issuing a Competition Notice will assist the resolution of customer transfer problems and further the ACCC objectives, especially relating to compliance with the Trade Practices Act 1974 and improvement in market conduct.
'The Australian Communications Industry Forum has made considerable progress in facilitating the development of industry-wide solutions to these problems. The ACCC sees the notice as complementing these initiatives and dealing with matters which remain outside the scope of self-regulatory processes.'
The notice will come into force on 30 September 1998. This gives Telstra sufficient time to cease its anti-competitive conduct.
Should Telstra continue to contravene the competition rule after that date, then it will be liable for damages. In addition, the ACCC is able to seek penalties from Telstra. The maximum penalty Telstra will be liable for is $10 million, plus $1 million per day for each day the conduct continues.