Regulation Decision = Legal Action

According to a recent article in SMH’s “Business Day”, it’s revealed nearly everytime a pricing decision is released by the ACCC, they take that decision for legal action.

The idea here is pretty clear. With a pricing decision made by the ACCC, Telstra takes it to court, the competitor who wanted to have the decision made, so they could get a fair go, with realistic pricing, now faces uncertainty as to whether Telstra has a genuine case in court, and any perceived business model based off that ACCC determined realistic pricing, could indeed be overturned in court, and that would mean that the company could end up having to fill a debt if they used the ACCC pricing as a calculation for it’s plans.

Further, they face investor shakeup if they are listed on the ASX, as the reduced rate could be used in profit forecasts, and if used, and a court overrules the ACCC decision, they could appear to be ‘doing bad’ to a investor who might not see the full story.

So, for Telstra, this is simply exerting more of its market dominance to ensure that they can keep competitors from doing the best they do, competing. It places large question marks over any plans made by a business, because understandably, when you look at ULL for example, where the ACCC rate is believed to be $14.40, yet, Telstra want’s $30, over the course of a year for a company with 100,000 connections, that’s a large shortfall in funding, to the tune of $18,720,000 if the decision is somehow overturned.

Of course, to make it worse, the competitor doesn’t know if there is ever grounds for a decision to be overturned, it has happened only once before, and that was in relation to a competition notice, served incorrectly, so to speak. So, for a competitor, if Telstra gets something overturned due to the ACCC making an error in some part, then the competitor, could face a shortfall in the millions of dollars, if they don’t take caution in their decisions on plan pricing!

Sucks for them, the ACCC are easy either way, since there isn’t much in the way of repurcussions for them if they get something wrong, and well, Telstra are on easy street, they always know where they stand, regardless of any boundaries put in place which introduce uncertainty.

Naturally, all this action from Telstra is simply aimed to reinvent or protect it’s fixed line monopoly rates, which have been completely trashed to peices as a result of strong alternative infrastructure investment.

ARPU, which is how they measure their profit per user, drops considerably for a user on competitors infrastructure. That’s very bad news for Telstra, so they have just a few options!

1. Make it uncertain for companies to make solid and sound investment decisions. That’s what they seem to be able to do now.
2. Place technology barriers in place of as many connections as possible to prevent ADSL2+ cutover.
3. Delay deployments for competing ISPs to protect any revenue from ADSL1 services.
4. Get as many customers as they can on long term contracts.
5. Make it hard for customers to go to competing ISPs, using any number of tactics to ensure they stay a retail customer.

There doesn’t seem to be much in the way of legislation that says Telstra can’t take action on every decision, even if Telstra knows it doesn’t have a case to put forward. So long as they got the money to create a case, then, they might as well as do that to keep competitors on edge from investing.

The solution naturally, would be to introduce a ruling that all ACCC rulings are final, but then, we can see how Telstra might claim to be disadvantaged under such a model.


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