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telstra s rivals get rent cut

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    Telstra's rivals get rent cut
    Michael Sainsbury | June 29, 2007

    THE competition regulator has slashed the prices Telstra rivals pay to rent its raw copper wires by between 20 per cent and 35 per cent in the latest blow to the giant telco's business.

    The move is likely to increase the impetus for Telstra to build a residential fibre-to-the-node network as it attempts to rip up, or sideline, the copper network that enables its competitors to offer rival broadband services.

    The Australian has learned that a number of companies yesterday received new pricing under a range of arbitrations that have been determined by the Australian Competition and Consumer Commission.

    The pricing under the arbitrations may be made public today by listed companies in the actions and the ACCC may also publish its reasons for the pricing.

    The new prices are even lower than those previously published by the ACCC, which Telstra claimed were below the rates it costs to run and maintain its ageing copper network.

    The ACCC has divided Australia into four regions for the purposes known as Band 1-4. This ranges from inner metropolitan areas in Band 1 to outer rural areas in Band 4.

    But about 70 per cent of Australians live in the metropolitan Band 2 and the ACCC has dropped the monthly rental price for a copper line, also known as the unbundled local loop (ULL), in Band 2 from $17.70 to as low as $13.80.

    Last month, Telstra lost an appeal to the Australian Competition Tribunal on the copper pricing. The telco wanted to charge a price of $30 for all copper wires across the country.

    It is understood that the ACCC has backdated the price to the 2004 price of $13.30 and allowed for incremental rises over five years to about $14.50.

    The ACCC is understood to have dropped the price in Band 1 to below $6 and the price in Band 3 from $40 to $27 per month.

    As part of its arbitration, the ACCC also decreed a process for Telstra to move customers across from so-called line sharing services - which use Telstra voice service and a competitors broadband - to ULL.

    On ULL, Telstra's rivals can offer their own voice and broadband services.

    The decision comes after a sustained and sometimes abusive campaign by Telstra against the ACCC.

    iiNet chief executive Michael Malone would not say whether his company had received any correspondence from the ACCC.

    But he said: "I think ULL is the right technical solution and where we want to see our customers."

    Still, despite continued prices cuts by the ACCC, Telstra's BigPond internet arm continues to win the lion's share of new customers and has consistently improved its market share under group managing director Justin Milne.

    The ACCC declined to comment. Meanwhile, junior telecommunications group Commander has issued its second earnings downgrade in three months.

    The company said late last night that its earnings before interest and tax for 2006-2007 would be $65 million. In April, the company cut EBIT guidance to $80-$90 million from $95-$101 million.

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