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"Buy, don't build" is message from High Court
Australians lost an opportunity to enjoy more broadband investment when the High Court today upheld a regulatory regime that rewards Telstra's competitors who ride on Telstra's network rather than invest in Australia.
Telstra argued that regulations compelling the company to offer network access at loss-making wholesale prices breach the Constitution because they amount to the acquisition of shareholders' property without just compensation.
"A victory today would have meant more investment, more infrastructure and more competition for Australia, all of which would have been good for Australian consumers and businesses," Telstra's Group General Counsel, Mr Will Irving, said today.
"We accept the decision, but we are disappointed because it means Australians lose an opportunity for more investment, more competition, more innovation and more choices in broadband.
"Our competitors now have little reason to invest in their own networks, knowing instead they can simply resell Telstra services. The can now 'buy' rather than 'build' - a perverse outcome, by any measure," he said.
Telstra stood by its decision to challenge the ACCC's powers under section 51(xxxi) of the Constitution, which guarantees just compensation when property is compulsorily acquired.
Telstra said that ACCC decisions, which see wholesale customers pay as little as $14.30 per month for unbundled local loop and $2.50 per month for line-sharing, amount to compulsory acquisition of shareholders' property without fair compensation.
Despite the increasing cost of copper, service vehicles, fuel and labour, the ACCC continues set wholesale prices at levels that are beneath other developed countries.
"We challenged the law because we had a legal and ethical duty on behalf of our shareholders not to stand idly by while the ACCC reduced wholesale prices to some of the lowest levels in the developed world - even though network costs in Australia are the highest in the world owing to long distance, low densities and difficult terrain," Dr Phil Burgess, Group Managing Director, Public Policy & Communications, said today.
"Today's decision shows how the law is being used by a rogue government agency, the ACCC, to arbitrarily redistribute the investments of more than one million Australians.
"In some cases this redistribution of wealth means the savings of Australian investors have been handed over to highly-profitable foreign corporations that have no right to be subsidized, least of all by Australian investors," Dr Burgess said.
The decision, which maintains the status quo, will be analysed closely by Telstra as it is likely to have an impact on future network investment decisions.
Reference Number: 069/2008
