TelstraClear doubts fairness of interconnection rate

Telecom's suggestion that the current interconnection rate of 2.6 cents was "commercially negotiated" is a misrepresentation, says TelstraClear's regulatory affairs spokesman.

Telecom’s suggestion that the current interconnection rate of 2.6 cents was “commercially negotiated” is a misrepresentation, says TelstraClear’s regulatory affairs spokesman.

Grant Forsyth was presenting the company’s closing submission at the interconnection conference in Wellington last week.

With no regulatory regime in operation, he said, new entrants “had to take what Telecom offered”. It is therefore realistic to represent this as an unfair rate and to contend that it be lowered substantially.

Telecom had earlier suggested that a drop to around half of that rate almost immediately would be out of kilter with the gentler slopes downward experienced by other countries in their interconnection rates. TelstraClear presented a table of interconnection rates from European Community countries, which showed falls of as much as 69.06% for Portugal between 1998 and 1999 and, more typically, reductions in the high 30s for a number of other countries.

The Australian Competition and Consumer Commission (ACCC) forced a substantial reduction of interconnect and wholesale charges on Telstra between 1997 and 1998, TelstraClear points out.

Telecom had contradicted itself about whether the interconnect charge covered the TSO, Forsyth says. TelstraClear presented figures with the Telecom TSO cost estimate — $178 million — factored in, showing that with the charge at the level of the third-quartile of the table, TSO expenditure would bring the cost back up to 2.43 cents — a minimal saving.

Forsyth says the plea by Telecom’s operations chief, Simon Moutter, for a high rate to be continued so Telecom is not forced to cut back its investments is “a naked plea for retention of its dominant position. We can only dream of that amount of retained revenue,” he says. TelstraClear has to create revenue by creating attractive services.

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Tags interconnection

More about Australian Competition and Consumer CommissionAustralian Competition and Consumer CommissionTelstraClearTelstra Corporation

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