Competitive carriers targeted by Telstra as part of its suit against the Commonwealth in the Australian High Court are furious – but very much off the record – at what they say is the latest delaying tactic from an incumbent that is unwilling to compete in the marketplace.

Telstra’s summons lodged with the High Court last week named the Australian Competition and Consumer Commission, the Commonwealth of Australia and access seekers who have sought arbitration on Telstra’s unbundled local loop and line sharing prices.

The access seekers targeted by the Telstra summons are iiNet/Chime, Primus, Internode/Agile, Macquarie, Adam Internet, NEC Australia, Amcom, Powertel/Request and Optus/XYZed.

In various emails with CommsDay reporters over the weekend, the common thread among competitive carriers’ reactions was that they did not want to respond on the record until they had sought legal advice on what is for them the uncharted waters of constitutional law.

But off the record they were scathing at Telstra’s actions, especially its suggestion that it might seek tens of million of dollars in retrospective compensation from them.

“We are in a fascinating realm where it’s cheaper for Telstra to argue an unwinnable position, but to take as long as possible to do so, than it is to allow the ACCC to proceed without hindrance with its arbitrations,” said the CEO of one access-seeker carrier in an email to CommsDay.

“One way or another, the government are the people who need to act, and act swiftly, here. Why? Because they sold this gorilla — they assured the industry and the public that the regulations concerned would protect the competitive framework and hence the interests of consumers.”

“If this action is allowed to run in its current form, the government is, in effect, allowing Telstra to control the competitive framework in a massively cynical manner — far more so than they ever have before.”

At a conference call last Wednesday, Telstra was at pains to state that it was not trying to prevent access to its network and that its latest action would not threaten continuity of supply. Instead, it was intended to test Telstra rights for a compensation process to be established under constitutional terms.

However, another industry source, a former telco industry lawyer, told CommsDay that there is a direct precedent against Telstra’s argument which suggests it might have difficulty getting the case up: the question of whether unbundling is a state acquisition of property, deserving of just compensation.

“Telstra may or may not have a legitimate argument on whether it is receiving just terms – unfortunately for them, in my view the case will be decided on a much more prosaic issue. The bigger challenge Telstra has is to establish that there has been an acquisition of property by the Commonwealth,” said the source.

The pertinent case was the highly controversial Commonwealth versus Tasmanian Government High Court case over heritage regulation, held in 1983. That case was brought about and won by the Commonwealth to prevent the damming of the Gordon River by the Tasmanian Government.

In its findings, the High Court said “…the extinction or limitation of property rights does not amount to acquisition. The transfer of property from one person to another, not the Commonwealth, does not amount to an acquisition within paragraph 31 of section 51. Unless the Commonwealth gains some property from the State or person, there is no acquisition within the paragraph.”

Peter Fray

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Peter Fray
Editor-in-chief of Crikey