Optus warns watchdog over rising network costs

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OPTUS has warned the competition regulator that broadband prices will rise and competition will wither unless it rejects Telstra's proposed changes to the telecommunications wholesale access regime.

In a letter obtained by The Australian, Optus tells the Australian Competition & Consumer Commission that Telstra's proposed pricing model for access to its network is nothing other than a "rebadging of the ACCC's existing pricing approach".

"Telstra is using this review as another avenue to raise access prices by seeking to entrench a high-cost methodology, albeit under the guise of a new approach," Optus says.

Telstra's proposed cost model is misleading as it would value network assets using a "hypothetical cost model", it says.

That would allow Telstra to charge wholesale access to its network on the basis that its fully depreciated copper network was a new asset. "Telstra's scheme fails to reflect past compensation and would allow it to recover network costs many times over by overcharging its competitors and their customers. Optus believes that Telstra should be able to recover the cost of its actual prudent investment, but no more," Optus writes.

Should elements of Telstra's access pricing proposal be adopted by the ACCC, Optus warns that consumers would face price rises for retail broadband and telephony products.

"Under Telstra's plan, consumers would pay inflated rates for service across Telstra's copper, which could well be higher than the rates they will be paying for high-speed services across NBN Co's optical fibre. Telstra's proposal is clearly detrimental for competition and for consumers."

Telstra did not respond to requests for comment.

Optus says the ACCC has criticised the use of such models in the past and has rejected legal attempts by Telstra to use them. Last week the Australian Competition Tribunal rejected a legal appeal by Telstra to increase the price of wholesale access to its metropolitan copper network, which the telco's competitors use to deliver broadband and telephone services to consumers.

That would have increased monthly wholesale access charges in metro areas -- about 70 per cent of all copper lines -- from about $17 to $30. The ACCC has launched a sweeping review of the pricing access regime to ensure a level playing field ahead of construction of the $43 billion national broadband network.