Telstra claims rare ACCC victory

TELSTRA has claimed a rare victory in its unhappy relationship with the competition regulator after the Federal Court quashed a competition notice it ruled had been issued illegally.

The court dispute related to two Telstra fixed line home phone products – one a wholesale line rental product and the other a retail home phone product.

The products were originally offered in mid-2005, but the Australian Competition and Consumer Commission (ACCC) issued a competition notice on the products in April 2006.

Telstra complains that just four days after the ACCC issued the notice, “Optus commenced its own legal proceedings against Telstra on the back of the competition notice.”

Justice Annabelle Bennett ruled that the ACCC had acted illegally in issuing the competition notice, because it denied Telstra the procedural fairness. The ruling related to discrepancies between the competition notice and the consultation notice issued prior to it.

Telstra, which has a relationship with the ACCC best described as poisonous, is using the ruling to again call for the ACCC to have its powers curbed.

Telstra's Group General Counsel Will Irving said: "As we said in April, the ACCC's powers should be overhauled given the finding of the Court that the ACCC had not treated Telstra fairly.

“The ACCC's competition notice exposed Telstra to potential fines of up to $3 million a day, as well as third-party litigation of precisely the type we saw from Optus,” Mr Irving said.

“Telstra has long argued that Part XIB of the Trade Practices Act gives the ACCC too much selective power that is clearly susceptible to gaming by competitors.”

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Gloves come off in FTTN campaign

A GROUP of 11 telecommunications and internet companies have joined forces to counter what they say is an orchestrated Telstra campaign of misinformation on broadband, competition and regulation in Australia.

The companies – AAPT, Austar, iiNet, Internode, Macquarie Telecom, Powertel, Primus Telecom, Telarus, TransACT, WestNet and Unwired – have sent a letter of complaint to the consumer watchdog asking it to investigate whether the Telstra campaign represents misleading and deceptive conduct.

The complaint to the Australian Competition and Consumer Commission details a series of instances, including a media release, a teleconference and an email to customers where it says Telstra “has simply not told the whole truth.”

“Telstra is pushing the false impression that Australia’s regulatory regime somehow ignores its costs and legitimate business interests,” the group said in a statement.

“This is not the case, and if past performance is any indicator, Telstra is on a rampage to force both sides of politics to weaken the Trade Practices Act so it can increase prices.”

Calling themselves T4, the group has launched an education campaign called Tell the Truth Telstra that targets MPs, regulators and the public with what it call “the facts behind the state of broadband and telecommunications regulation in Australia.”

The T4 group has launched a web site at tellthetruthtelstra.com.au to counter some of the claims coming out of Telstra’s own campaign web site, nowwearetalking.com.au.

“As the nation debates the future of broadband, it is time to set the record straight about communications services in this country and the central role of competition in satisfying consumer demand.

“With an election looming, Telstra has turned up the volume and strayed a long way from the facts,” said the T4 group.

The group says that since government introduced competition in Australia, competitors had pioneered innovations like internet access for home and business, capped plans for mobile, and fast broadband using ADSL2+ and 3G services.

It says that “time and again” Telstra has only introduced new services and lower prices when it was forced to match the competition.

“Now Telstra is acting as though it can hold the country to ransom – positioning itself as the only company that can deliver Fibre-to-the-Node (FTTN) and demanding to be allowed to increase prices before it will do so.

“The regulator has told a Senate hearing that Telstra had ‘walked away from upgrading its network to a FTTN because it could not get a green light to artificially inflate the price for existing broadband services in order to be able to justify charging higher prices for access to the new network’.

“Pretty much everyone but Telstra is united in the desire to create better broadband through effective competition rather than watered-down regulation,” the group spokesman said.

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ACCC dismisses Telstra broadband “bluster”

THE competition watchdog has dismissed as “noise and bluster” Telstra’s claims that regulatory uncertainty in the industry was hampering investment and causing a broadband drought in Australia.

Australian Competition and Consumer chief Graeme Samuel told a telecommunications conference in Sydney yesterday that far from suffering drought conditions, broadband in Australia was booming.

Mr Samuel said Telstra claims that Australia was lagging the world in broadband take-up were disingenuous, pointing to Bureau of Statistics numbers that say more than 1.8 million broadband customers were added from March 2005 to September 2006 – growth of more an 50 per cent in 18 months.

He argues that too much is made of OECD figures that say Australia ranks 17th out of 30 developed countries for broadband take up.

The same survey found that Australia’s rate of growth in broadband subscribers is the second fastest in the OECD, suggesting it is now moving up the rankings, Mr Samuel said.

Increased market competition had spurred carriers – including Telstra – to roll-out ADSL2+ services, which were now available to about 46 per cent of households.

“In addition, mobile broadband is now available to 98 per cent of the population,” Mr Samuel said.

“This suggests broadband is booming,” Mr Samuel said. “But despite this, Telstra argues we are in a ‘broadband drought’.”

Addressing the annual Australian Telecommunications User Group (ATUG) conference in Sydney, Mr Samuel also chastised Telstra over its claims that regulatory uncertainty made it difficult for the company to invest in higher-speed broadband services.

Telstra has said regulatory problems meant it was unable to roll-out ADSL2+ technology to exchanges that did not already have an ADSL2+ competitors’ equipment installed.

“Telstra argues that without regulatory certainty, it cannot offer ADSL2+ in exchanges where its competitors do not already offer this service,” Mr Samuel said.

“However there is a very easy way for Telstra to receive absolute regulatory certainty – by asking for an exemption from regulation for ADSL2+,” he said.

“Let me be perfectly clear: if the ACCC is satisfied that an exemption should be granted, it will not force Telstra to give access to its competitors to this particular service.”

“You can't get much more certainty than that,” Mr Samuel said.

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Online consumer scams on the rise

AUSTRALIANS continue to fall prey to crimes of identity theft in unprecedented numbers – despite large-scale awareness campaigns highlighting identity theft as a major new criminal activity.

“On identity theft alone, losses to the Australian community are estimated to be in excess of $1 billion annually,” said Consumer Fraud Taskforce (ACFT) chair Louise Sylvan.

“In the last four months, consumers who registered complaints with the Australian Competition and Consumer Commission (ACCC) lost a total of $5.2 million to scams and rip-offs,” she said.

“Since the campaign last year, the top scams and frauds complained about to the ACCC continue to be lottery scams and advanced-fee fraud (like the Nigerian scam), with employment scams making it for the first time into the top three.”

Because of the seriousness of these crimes, agencies across Australia and New Zealand joined forces to form the ACTF in 2005 to heighten consumer awareness.

Ms Sylvan, who is also deputy chair of the ACCC, said the best way to combat identity theft problems was to make sure they didn’t occur in the first place – and that was only achieved by make consumers aware of the dangers.

In the US, technology research group Gartner says the incidence of identity theft had grown by more than 50 per cent in the past three years.

Gartner said about 15 million Americans were victimised by some sort of identity theft-related fraud in the 12 months ending in mid 2006 – a 50 per cent increase on the 9 million adult identity theft victims reported in 2003 by the Federal Trade Commission.

The Gartner survey of 5,000 online US adults in August 2006 found the average loss was US$3,257 (A$4,192) in 2006, up from US$1,408 in 2005. At the same time, the percentage of funds consumers managed to recover dropped from 87 per cent in 2005 to 61 per cent in 2006.

“Hackers are exploiting internet auctions, non-regulated money transmittal systems, the ability to impersonate lottery and sweepstake contests, and other types of imaginative scams,” said Gartner vice-president Avivah Litan said.

“The thieves have also discovered the weakest links in the US payments systems. Typically, the weak links are found among the five or more million businesses that accept electronic payments from consumers, and the consumers themselves.”

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Telstra attacks ACCC as “rogue regulator”

THE ACCC has revoked a competition notice issued against Telstra over wholesale line rental prices, only to be immediately attacked by the company.

The Australian Competition and Consumer Commission had issued the Competition Notice in April last year, saying it “had reason to believe Telstra’s wholesale and retail pricing was anti-competitive.

Had the regulator successfully pursues the action, Telstra would have been liable to fines of up to $3 million a day – or about $1 billion since the notice was issued.

The ACCC now says that in light of changed regulatory circumstances, further enforcement action was no longer warranted.

“In light of the changing regulatory circumstances, including the declaration of the Wholesale Line Rental service, it was not necessary to keep the notice in force,” the ACCC said in a statement.

“This decision followed consultation with industry about developments since the service was declared, and the ACCC also took into account some changed market circumstances that were reported in this consultation.”

Telstra welcomed the decision to abandon the action, which it called “ill-conceived and unfounded.” The company now wants Government to rein in the ACCC’s powers in the telecommunications industry, calling it a “rogue regulator.”

Telstra public policy and communications group managing director Phil Burgess said exposing Telstra shareholders to a $1 billion potential maximum penalty “was an example of the heavy-handed exercise of extraordinary powers given to the ACCC.”

Mr Burgess said there never were legitimate grounds for the ACCC to issue a competition notice against Telstra because the company had consulted the regulator before making changes to wholesale prices in December 2005.

“The problem here is pretty simple to describe,” Mr Burgess said. “The ACCC has special powers over Telstra that allow it to shoot first and ask questions later. That is not the way things should work in a democratic society.”

“The ACCC's addiction to intrusive regulation continues to damage Telstra, weaken the telecommunications industry, and stunt broadband investment for Australia's future,” he said.

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Watchdog targets ADSL2+ advertising claims

THE Australian competition watchdog has warned internet service providers it will prosecute companies that make misleading claims about the download speeds of different broadband technologies.

Australian Competition and Consumer Commission chairman Graeme Samuel said he was concerned that ISPs were making claims in advertising about download speeds not achievable outside of a laboratory environment.

“The ACCC is concerned that ISPs are using 'hypothetical' speeds when these speeds are just that – available to the hypothetical consumer not necessarily the real world consumer,” Mr Samuel said.

“At the ACCC, we are concerned about the real-world consumer.”

The ACCC has published an information paper “to assist ISPs comply with the Trade Practices Act”.

Though the information paper is technology neutral and is directed at all broadband service providers, it focuses primarily on ADSL2+ services as it is not as well understood by consumers.

The paper draws attention to the industry practice of using hypothetical speeds as the basis of speed claims in advertising when such speeds are unlikely to be achieved in the real world.

The ACCC has warned ISPs that they should have a reasonable basis – such as real world network trials – for any claims they make in advertising.

“The paper focuses on ADSL2+ because consumers may be attracted to these services by speed claims,” Mr Samuel said.

“As a new technology, consumers usually have less information than the provider of the service and may be misled by headline claims of hypothetical maximum speeds,” he said.

The paper outlines penalties available to the ACCC for conduct it believes breaches the misleading and deceptive conduct provisions of the Trade Practices Act.

Penalties include corrective advertising, injunctions to prevent the prohibited conduct, and fines up to $1.1 million for companies and $220,000 for individuals.
The ACCC monitors advertising by ISPs, and will continue to closely monitor advertising of internet speeds to ensure that high-speed broadband services are appropriately qualified.

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