Telstra's tactic to restrict fair competition 'backfired': iiNet

Perth ISP iiNet says Telstra's increase in wholesale line rental is a tactic to restrict competition that has 'backfired' and welcomes the competition regulator's decision to issue Telstra with a consultation notice.

Below is the iiNet statement:

iiNet said today that it welcomed the Australian Competition and Consumer Commission's decision to issue a consultation Notice to Telstra over its wholesale line rental increase - a tactic to restrict competition that has 'backfired' on Telstra.

"This week has been a bad week for Telstra. It started with the Government's strong message on pricing parity, coupled with an indication that the Government would not override ACCC decisions, followed by Telstra acknowledging that the fibre to the node or FTTN project was on hold and now the ACCC rejecting Telstra's ULL undertaking. To top it all off we see that the ACCC has now issued a Consultation Notice to Telstra following industry complaints about its wholesale pricing policies," said Michael Malone, CEO and Founder of iiNet Limited.

"We believe that the Consultation Notice will ultimately result in the ACCC issuing a Competition
Notice to Telstra."

"It would appear that all Telstra's tactics to 'game' the regulatory regime seem to do is
backfire; causing delays in its own business plans and create ongoing market uncertainty which
damage its shareholder's wealth."

"iiNet believes Telstra's increase in the wholesale line rental is unjustified, given that it will not be passing the same line increase charge onto the majority of its own customer base and we will continue to challenge these new charges and submit our argument to the ACCC."

"In the interim we are focusing on building our own voice network (known as an MSAN network),
with phase one expected for deployment by March 2006. By owning our voice network, we will
reduce our dependence on Telstra's phone service, and provide customers with all the benefits
of a traditional phone network, additional features and at better prices," concluded Michael Malone.