Telstra to challenge ACCC line ruling

THE Australian Competition and Consumer Commission has called on Telstra to reduce its line sharing service costs, Perth-based iiNet has announced, but the telco giant intends to challenge the ruling. iiNet subsidiary Chime Communications, formerly Arkane Pty Ltd and iiTel Pty Ltd, initially challenged Telstra over the cost the company charged for use of its lines. Chime uses Telstra’s line sharing service, which enables broadband ISPs to use Telstra’s copper wire to deliver ADSL services while it continues to provide a normal telephone system, when selling wholesale telephony and data services to corporate clients and ISPs. Under the determination, a new rate of $2.50 per month replaces the interim rate of $3.20/month, and will be backdated to June 1 2004. In an announcement, iiNet said it had 136,155 broadband services on LSS at the end of the financial year, resulting in reduced costs going forward of about $95,000/month relative to the interim rate, or $885,000/month if the previous rate of $9 had continued to be applied. The ACCC has directed that the settlement amount is to be paid by August 24 2007. The iiNet announcement said the company expected a once-off settlement of about $16 million. But Telstra spokesman Jeremy Mitchell said his company would challenge the ruling. “We will always protect our shareholders’ assets from any third party who enjoys privileged regulatory protection so they don’t have to worry about building, installing and maintaining their own infrastructure,’’ he said. The news follows an announcement of an interim ACCC determination that Telstra reduce its wholesale line rental charges to $23.12/month for home line rentals and $25.84/month for businesses. iiNet said this would mean a $5 drop in retail line rental costs, from $34.95 to $29.95. The ACCC also ruled that local call costs on the service should be increased to offset the decrease in line rental, up to 32 per cent at the wholesale level, according to iiNet. Andrew Hobbs

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