The Australian Competition and Consumer Commission (ACCC) has threatened Telstra Corp with Federal Court action over alleged anti-competitive behavior towards other internet access providers (IAPs). Telstra hosts the lion’s share of Australian internet content. It charges the country’s other IAPs 19c per megabyte to carry their traffic on its own network, but it will not pay them for the Telstra traffic they carry on theirs. Since the other IAPs are not in any position to refuse to pay the megabyte charge, the ACCC believes it represents an abuse of Telstra’s market dominance. Australian telecommunications were deregulated last year under the Trade Practices Act, which prohibits telcos from engaging in anti-competitive behavior. That behavior is defined as taking advantage of market power with the effect of decreasing competition. When a telco contravenes those sections of the Act, the ACCC has the power to issue a Competition Notice setting out the particulars of the contravention. This is what the Commission has done. It is the first time a C-Notice – described by observers as the thermonuclear device of the ACCC regulatory armory – has been issued. If Telstra continues engaging in the behavior described in the C- Notice after June 5 1998, the ACCC can approach the Federal Court, which has the power to impose a flagfall fine of A$10m (US$6.3m) plus A$1m per day until the telco desists. In fact, Telstra has already taken steps to rectify the situation by signing a peering agreement with OzEmail Limited. The Internet Industry Association (IIA) says negotiations are already under way with Australia’s two other IAPs, Optus Communications and Connect.com. The IIA, which is the peak industry body for internet service providers and which represents both Telstra and Optus, is calling for a negotiated peace. Executive director Peter Coroneos says a lawsuit will not be good for the industry generally and will delay a satsifactory resolution of the issue for many months.
