By Lucy Battersby
Telstra must accept a cap on wholesale broadband prices before the competition watchdog will let it finalise a lucrative deal with NBN Co, it emerged.
The Australian Competition and Consumer Commission says the proposed cap will lower retail broadband prices and increase competition.
The ACCC today for the first time ''declared'' the prices that Telstra can charge commercial customers for wholesale broadband services. The regulator has the power to set prices on certain services and already sets prices for basic phone access.
ACCC commissioner Ed Willett said declaring broadband services was the only way to resolve its concerns that Telstra would charge its wholesale customers too much.
It set interim prices of $25.40 a month in cities and $30.80 a month in regional and rural areas, plus a capacity charge, and will set final prices after an inquiry. The prices are for ADSL services, a technology that provides broadband over copper telephone lines. Wholesale customers must also rent the phone line for about $23 a month.
''If Telstra now presents us with a revised [undertaking] … and makes a commitment that they are not going to challenge the ADSL declaration, then we will be able to move to consider that [undertaking] promptly. We do not see a need for any further consultation process,'' he said.
A revised undertaking could be considered within weeks, he added. This means Telstra could complete its $11 billion deal with NBN Co swiftly if it agrees to the wholesale price cap.
Shareholders last year voted overwhelmingly in favour of the deal because it provides Telstra with a new cash flow over many years and could lead to a share buyback.
Telstra has been surprised by the ACCC's strong stance on wholesale broadband prices. A spokesman said it ''is assessing the implications of this decision for our business''.
''Telstra is disappointed by the ACCC's decision to declare Wholesale DSL. Telstra does not believe that market conditions justify increased regulation of Telstra's copper network at this time,'' the spokesman said.
The ACCC justified its position by saying Telstra still dominated the fixed broadband market. ''Despite the deployment of competitive broadband infrastructure in some areas over the past decade, competition in the supply of [broadband] services is not effective,'' the ACCC noted.
Telstra's main rivals, Optus and iiNet, welcomed the decision, saying it created a level playing field for the first time. ''This decision opens up opportunities for more competitive broadband services, particularly in regional Australia,'' an Optus spokeswoman said.
An NBN Co spokeswoman said the decision would not affect its basic monthly access price of $24 per line, as this service included broadband and voice services. A Telstra wholesale customer must buy wholesale voice services on top of ADSL services.