Telstra loses out in pricing dispute

Just when it looked like things could not get worse for Australian carrier Telstra, they do. On Tuesday, the Australian Competition and Consumer Commission (ACCC) slapped the incumbent operator with a request that it reduces access charges for its local loop network, a term commonly referred to as local loop unbundling (LLU).

The ACCC is understood to be forcing Telstra to reduce LLU access charges for local wholesale communication form Chime by 20 per cent. But it is thought that the move could set a precedent on similar agreements Telstra has with other providers.

Macquarie Telecom looks to be the first to follow suit, today filing claim with the ACCC of an LLU access dispute with Telstra.

Telstra has long fought with the authorities over pricing and regulation, an attitude that has put the government’s planned 51.8 per cent stake sale in the company in increasing jeopardy.

Telstra chief Sol Trujillo last week took the opportunity to blast the competition commission for “mandating competitors’ below cost access to our fixed line network”.

The company has also abandoned its A$4bn fibre network after a dispute over pricing with the competition regulator. The state run operator scrapped the project after reportedly failing to reach an agreement on how much it would charge rivals to access the high speed network.

With the Australian government putting increasing pressure on Telstra to iron out its regulatory wrinkles, this latest move puts the A$32bn privatisation of the company in further doubt.

Meanwhile, Trujillo is drawing fire over the company’s finances. For the year to end June 30, profit at the carrier dropped 26.2 per cent to A$3.18bn (£1.28bn) from A$4.3bn in 2005, hit by redundancy and restructuring costs and decline in traditional telephone services.