TPG, Optus join court fight over Telstra wholesale prices

Telstra v ACCC scheduled to be heard in March 2016

Telstra and the Australian Competition and Consumer Commission today appeared in Federal Court in Sydney.

The two parties are set for a fight over an ACCC decision that cuts the wholesale pricing for seven of the telco’s fixed line services.

TPG and Optus this morning successfully applied to join the Federal Court proceedings.

The ACCC issued its final decision last month.

Telstra had argued it should be allowed to raise prices.

However, the ACCC decided on a one-off uniform fall of 9.4 per cent in access prices for the services, revised down from the 9.6 per cent fall in a draft decision issued in June.

The decision on prices applies from 1 November 2015 until 30 June 2019.

Telstra launched court action earlier this month.

"In our view, the decision does not follow the ACCC’s own fixed pricing principles that require Telstra to be given the opportunity to recover from wholesale customers the costs of providing services to them," a spokesperson for the telco said at the time.

"We believe the court is the appropriate place for us to get clarity on this matter."

Both TPG and Optus opposed Telstra's push to raise wholesale prices during the ACCC pricing consultation.

In a submission on the ACCC’s draft decision, TPG had indicated it backed the competition watchdog’s draft proposal for a one-off 9.6 per cent decrease in the primary prices of the fixed line services.

“If the draft pricing is confirmed, competitive forces should result in a price reduction for fixed line services for end users,” TPG’s submission stated.

Read more: Optus complaints up, Vodafone and Telstra down, TIO figures show

“The fundamental principle should always be that Telstra is paid a reasonable cost recovery on assets,” the telco argued.

“TPG submits that Telstra has long over-recovered and that it is probably significantly overrecovering from the [NBN] Definitive Agreements. If the pricing is not reduced, this will result in the continued transfer of wealth from the end users of copper based services to Telstra shareholders. Such a position cannot be reasonably maintained having regard to the principles that the ACCC is obligated to consider.”

In its submission on the draft decision, Optus had argued that although the proposed pricing adjustment “will lead to a reasonable reduction in access prices, these prices will still be well above international benchmarks”.

Optus said it would still back the ACCC adopting its revised pricing scheme.

“Whilst this may not maximise the long term interest of end-users, it will deliver a reasonable and balanced outcome that will still promote competition and end-user interests during the transition to the NBN,” the telco wrote.

Optus today issued a short statement confirming that the Federal Court had allowed it to join the proceedings.

“Optus will make submissions in due course,” a spokesperson said.

TPG has been approached for comment.

The parties are due to return to court for a case management hearing in February.

Arguments will be heard over two days in March next year.

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Tags TelstraAustralian Competition and Consumer Commission (ACCC)

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