Telstra Loses High Court Battle

The High Court of Australia has ruled against Telstra in its challenge against the Trade Practices Act and the ability for the ACCC to set access prices for its network.

Telstra launched the case in January last year, and was attempting use section 51 (xxxi) of the Australian Constitution, which it says "guarantees just compensation when property is compulsorily acquired". Telstra believed that it was being forced to sell access to its line sharing product (LSS) below its costs.

But all seven High Court Judges disagreed with the fundamentals of Telstra's case, stating that Telstra was privatised after the 1991 Telecommunications Act was put into place. The Act was specifically designed to ensure competitors could gain access to Telstra's network.

"It was not (and could not be) suggested that vesting those assets (and the associated liability to pay for the assets) in Telstra was other than a transfer of the assets to be held and used in accordance with and subject to the then regulatory regime contained in the 1991 Telecommunications Act", said the ruling.

Telstra group general counsel Will Irving said the decision was disappointing. "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.

iiNet's Steve Dalby disagreed, saying "the reality contradicts Telstra's comments". "The industry has been investing millions for years", he told Whirlpool. "This judgement provides the certainty for further investment."

Telstra has been ordered to pay the costs of the case.

[ Source: Whirlpool]

Related Links:

• High Court Judgement [ Australasian Legal Information Institute ]
• Telstra response (Telstra, 6 Mar 2008)
• Whirlpool