Telstra Pressure Mounts

Sun Herald

Saturday July 5, 1997

By DAVID POTTS Business Editor

TELSTRA is under pressure to cut the fees it charges other phone companies to use its lines, paving the way for cheap or even free local calls.

An all-out assault on the lucrative local call market would jeopardise Telstra's forthcoming partial float.

Although Telstra has been forced to cut its rate, which is charged to get on and off phone lines, from 4.12c to 2.84c a minute, the Australian Competition and Consumer Commission (ACCC) yesterday said its determination may not be final.

"We looked at the retail products and asked whether the charge was reasonable. We had 30 days to do it in," said ACCC chairman Allan Fels.

"You should not presuppose it was a full arbitration of a full cost analysis."

Professor Fels said the ACCC would look at it again "in a full-on arbitration if there is a dispute".

A dispute seems inevitable as AAPT, the third biggest carrier, steps up its attacks on Telstra.

So far the phone wars, triggered by last week's deregulation of telecommunications and satellites, has not spread to local calls or mobiles with the new players concentrating on long distance, especially international calls.

AAPT claims the inter-connect rate, totalling almost 6c a minute, prevents it offering a local call service, accusing Telstra of "dragging its feet and frustrating real competition".

Chief executive Larry Williams added "AAPT has provided Telstra with 200,000 customer line numbers, yet Telstra is telling us they can only transfer 12,500 to non-code access per week". He claimed Telstra could "do 50,000 per week".

He said the inter-connect fee was a privilege given to Telstra when "it was all paid for by taxpayers. It has all been given to Telstra. It's like giving the roads away".

Because of Telstra's inter-connect rate, a typical five-minute local call would cost about 28c - 3c higher than now and 8c above Optus which has built its own network on its cable TV rollout.

This rules out new competition unless Optus offers a lower inter-connect fee on its network.

Optus, like Telstra, already leases lines to its competitors. A spokesman for Optus said it was rolling out its local network by "geographic node."

The managing director of Global One, Trevor Duff, said "Telstra's fee was at least double the rate for world's best practice.

"We have a long way to go."

WorldxChange has abolished the 12c flagfall phone companies charge before the meter starts ticking and the company's managing director, Richard Vincent, said the true cost "can be measured in tenths of a cent".

Mr Vincent said WorldxChange would offer cheap local calls if the inter-connect rate were reduced, a view repeated by five other phone companies contacted by The Sun-Herald.

"There is something wrong when it is cheaper to call Auckland than Perth," Mr Vincent said.

But WorldxChange was able to offer the cheapest international rates because "as soon as the phone lines get to Bondi Beach, it's our optic fibre".

HOW TO AVOID PHONE TRAPS

1. Look at old phone bills and see which long distance destinations you call most.

2. Ask what the minimum charge time is. This can be anything from 6 to 30 seconds.

3. Check the increments: does the phone company round the bill up to the nearest second, 30 seconds or minute? It makes a difference.

4. What is the connection charge or flagfall? Usually 12>; WorldxChange free.

5. Is the flagfall included in the tariff you are quoted?

6. Is there a minimum charge a month? Most of the new phone companies will sign you up for free, but check.

© 1997 Sun Herald

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