US blasts Telstra pricing bidMichael Sainsbury April 08,...

US blasts Telstra pricing bid
Michael Sainsbury
April 08, 2006

TELSTRA'S bid for new pricing on its copper network has been slammed by the US Government in a review of its telecommunications trade agreements ahead of an expected decision by the federal Government next week.

The Australian Competition and Consumer Commission believes Telstra should have different prices across four geographic bands from inner-city to regional.

But Australia's biggest telco has appealed to the Government to overturn rules set by the competition regulator and allow a national average price for network access.

"The likely effect of this new tariff, if Telstra's appeal ... succeeds, will be to preclude competition based on unbundled loops in the geographic areas that competitors want to serve," the US Trade Representative review said. "Given the effects on competition of Telstra's proposed average rate, Australia should consider other mechanisms to address rural service issues, such as expanded use of a competitively neutral universal service fund."

The comments are contained in the 2006 Section 1377 Review of Telecommunications Trade Agreements, an annual review released by the Office of the US Trade Representative this week.

But Andrew Ethel, policy adviser to Deputy Prime Minister and Trade Minister Mark Vaile, said the report did not constitute a trade dispute.

"We had meetings with them last month where this was discussed," Mr Ethel said.

He said the Government would "not particularly" take notice of USTR comments when formulating telecommunications policy.

The USTR said it would monitor the Government's efforts to ensure Telstra implemented an effective operational separation plan. It also said it would encourage Australia to adopt reforms concerning the structure and level of pricing for unbundled local loops that did not foreclose competitive entry into the Australian market.

Telstra has characteristically dismissed the report.

"They are seeking to protect the interest of American companies and the biggest American telco in Australia, Primus," Telstra spokesman Rod Bruem said.

The USTR review is required to be submitted to Congress in order to report on compliance with global telecommunications trade agreements.

Still, US industry group CompTel, in its filing with the USTR, praised Telstra for its position on mobile terminating rates, stating that Telstra's approach to mobile termination was "laudable".