AUSTRALIAN COMPETITION TRIBUNAL
Telstra Corporation Ltd [2001] ACompT 1
Trade Practices – Telecommunications Access Regime – access dispute – arbitration – application to Australian Competition Tribunal to review determination by Tribunal – applications by other persons to intervene and be joined as parties – whether intervention should be permitted.
TELSTRA CORPORATION LTD - File No. 1 of 2000
TELSTRA CORPORATION LTD - File No. 2 of 2000
JUSTICE von DOUSSA, MR R C DAVEY, PROFESSOR R C DUNCAN
ADELAIDE (HEARD IN SYDNEY)
21 FEBRUARY 2001
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IN THE AUSTRALIAN COMPETITION TRIBUNAL |
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File No 1 of 2000 |
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RE: |
APPLICATION BY TELSTRA CORPORATION LTD FOR REVIEW OF A FINAL DETERMINATION OF THE ACCC MADE ON 11 SEPTEMBER 2000 IN RESPECT OF AN ACCESS DISPUTE BETWEEN AAPT LIMITED AND TELSTRA CORPORATION LIMITED (DOMESTIC PSTN ORIGINATING AND TERMINATING ACCESS SERVICES)
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BY: |
TELSTRA CORPORATION LTD (ACN 051 775 556) APPLICANT |
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File No 2 of 2000 |
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RE: |
APPLICATION BY TELSTRA CORPORATION LTD FOR REVIEW OF A FINAL DETERMINATION OF THE ACCC MADE ON 18 SEPTEMBER 2000 IN RESPECT OF AN ACCESS DISPUTE BETWEEN PRIMUS TELECOMMUNICATIONS PTY LTD AND TELSTRA CORPORATION LIMITED (DOMESTIC PSTN ORIGINATING AND TERMINATING ACCESS SERVICES
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BY: |
TELSTRA CORPORATION LTD (ACN 051 775 556) APPLICANT |
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JUSTICE von DOUSSA (PRESIDENT) MR R C DAVEY and PROFESSOR R C DUNCAN
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DATE OF ORDER: |
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WHERE MADE: |
THE TRIBUNAL ORDERS THAT:
1. Applications by Optus Networks Pty Ltd and Optus Mobile Pty Ltd to intervene in the applications for review by Telstra Corporation Ltd in File No. 1 of 2000 and File No. 2 of 2000 be granted.
2. Application by Macquarie Corporate Telecommunications Pty Ltd to intervene in the said applications by Telstra be refused.
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IN THE AUSTRALIAN COMPETITION TRIBUNAL |
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File No 1 of 2000 |
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RE: |
APPLICATION BY TELSTRA CORPORATION LTD FOR REVIEW OF A FINAL DETERMINATION OF THE ACCC MADE ON 11 SEPTEMBER 2000 IN RESPECT OF AN ACCESS DISPUTE BETWEEN AAPT LIMITED AND TELSTRA CORPORATION LIMITED (DOMESTIC PSTN ORIGINATING AND TERMINATING ACCESS SERVICES)
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BY: |
TELSTRA CORPORATION LTD (ACN 051 775 556) APPLICANT |
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File No 2 of 2000 |
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RE: |
APPLICATION BY TELSTRA CORPORATION LTD FOR REVIEW OF A FINAL DETERMINATION OF THE ACCC MADE ON 18 SEPTEMBER 2000 IN RESPECT OF AN ACCESS DISPUTE BETWEEN PRIMUS TELECOMMUNICATIONS PTY LTD AND TELSTRA CORPORATION LIMITED (DOMESTIC PSTN ORIGINATING AND TERMINATING ACCESS SERVICES RESPONDENT
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BY: |
TELSTRA CORPORATION LTD (ACN 051 775 556) APPLICANT |
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TRIBUNAL: |
JUSTICE von DOUSSA (PRESIDENT) MR R C DAVEY and PROFESSOR R C DUNCAN
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DATE: |
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PLACE: |
REASONS FOR DECISION
THE TRIBUNAL:
1 Two applications each made under s 152DO of the Trade Practices Act 1974 (Cth) (the Act) came before the Australian Competition Tribunal (the Tribunal) for a preliminary conference on 15 December 2000. Three corporations, not presently parties to the proceedings, applied to intervene and become parties to each application. At the conclusion of the hearing the Tribunal indicated the decisions it proposed to make on the applications to intervene, but said that the decisions would take effect from the publication of reasons for the decisions. We now publish those reasons, and make orders permitting intervention by Optus Network Pty Ltd and Optus Mobile Pty Ltd (together referred to as Optus) in each application for review, and refusing the applications to intervene by Macquarie Corporate Telecommunications Pty Ltd (Macquarie).
2 There is a substantial history to both matters before the Tribunal. Each of the two applications under s 152DO have been brought by Telstra Corporation Ltd (Telstra) seeking review of determinations made by the Australian Competition and Consumer Commission (the Commission) on access disputes between Telstra and AAPT Limited (AAPT) (File No. 1 of 2000) and Telstra and Primus Telecommunications Pty Ltd (Primus) (File No. 2 of 2000). The determinations were made pursuant to the provisions of Part XIC of the Act which establishes a telecommunications access regime. To supply long distance, fixed-to-mobile and mobile-to-fixed call originating and terminating access services to end users in Australia, services providers often acquire input services from Telstra known as Domestic Public Switched Telephone Network (PSTN) services. These services involve the carriage of calls between an end-user’s premises and a point of interconnection, at which point another carrier becomes involved in carrying the call. These PSTN services were “declared” by the Commission under Part XIC of the Act on 30 June 1997.
3 Once a service is declared carriers and carriage service providers supplying the declared service to themselves or others are subject to the standard access obligations set out in s 152AR of the Act. These standard conditions include an obligation by the carrier or carriage service provider to supply the declared service to any service provider (the access seeker, as defined by s 152AG) that seeks access to the declared service.
4 The terms and conditions upon which a carrier or carriage service provider is to comply with these obligations are as agreed between the parties. In the event that they cannot agree, one of them can notify the Commission of an access dispute under s 152CM of the Act. Once notified, the Commission is required to arbitrate and make a determination which resolves the dispute in accordance with the procedure set out in Division 8 of Part XIC of the Act.
5 The Act enables a carrier or carriage service provider to resolve potentially contentious issues with the Commission outside the arbitral process. This can be achieved by the carrier or carriage service provider giving the Commission an access undertaking which sets out the terms and conditions on which it proposes to comply with the particular standard access obligations: see Division 5 of Part XIC. If the Commission accepts the undertaking, the terms and conditions for access specified in it apply to the provision of the declared service to an access seeker, and the Commission cannot make an arbitration determination that is inconsistent with the undertaking: see s 152AY(2).
6 Affidavit evidence submitted by Optus in support of its application to intervene deposes that in approximately 95 per cent of cases Telstra’s PSTN comprises the only fixed access line to a customer for the use and supply of telephony and other communications. In Australia Telstra has by far the largest PSTN. On 7 November 1997 Telstra gave an access undertaking to the Commission. That undertaking was published and submissions were invited from the public. The undertaking was the subject of a report released by the Commission in June 1999 entitled Assessment of Telstra’s Undertaking for Domestic PSTN Originating and Terminating Access – Final decision. The terms and conditions specified in that undertaking covered price and non-price issues. The Commission rejected the undertaking on the basis that the terms and conditions to do with non-price issues were not reasonable, but also commented to the effect that the weighted average prices proposed by Telstra were considerably more than the cost that an efficient firm would incur in supplying the declared PSTN services.
7 On 14 December 1998 AAPT, and on 5 March 1999 Primus, notified the Commission of an access dispute. On 24 September 1999 Telstra gave a second access undertaking to the Commission which offered, amongst other terms and conditions, access at a weighted average charge of 2.3¢ per minute for 1999 / 2000 and 2¢ per minute for 2000 / 2001. These rates were well above prices sought by AAPT and Primus.
8 On 10 July 2000 the Commission rejected the second access undertaking as not reasonable as required by s 152BV(2) of the Act, and published reasons for the rejection entitled A Report on the assessment of Telstra’s undertaking for the Domestic PSTN Originating and Terminating Access services, July 2000 (the July 2000 report).
9 Following the notification of the access disputes by AAPT and Primus, the Commission embarked upon the arbitration process required by Division 8 of Part XIC of the Act. It appears that active steps in the arbitrations were then suspended whilst the Commission considered the second access undertaking given by Telstra. After the rejection of the second access undertaking the Commission continued with the arbitrations of the access disputes. In the course of the arbitrations all the terms and conditions on which Telstra was prepared to provide the declared services to AAPT and Primus were agreed save for the price. The final determinations of the Commission, with reasons, fixing prices for the supply of the declared services to AAPT were published on 11 September 2000 and to Primus were published on 18 September 2000. It is those determinations which are the subject of the present reviews by the Tribunal.
10 Review by the Tribunal is provided for and governed by sub-division F of Division 8 of Part XIC, comprising ss 152DO to 152DS. A party to a final determination by the Commission may apply to the Tribunal for review within twenty-one days after the Commission made the determination. A review by the Tribunal is a re-arbitration of the access dispute. For the purposes of the review the Tribunal has the same powers as the Commission. The Tribunal may either affirm or vary the Commission’s determination. The determination as affirmed or varied by the Tribunal is to be taken as the determination of the Commission: see s 152DO. Sub-division F is silent as to the procedures for the conduct of a review by the Tribunal, save that s 152DP provides that ss 37, 39-43 (inclusive) and 103-110 (inclusive) of the Act do not apply in relation to review by the Tribunal. However procedures for the conduct of a review are contained in Part 2A of the Trade Practice Regulations 1974. Relevantly for present purposes reg 28E prescribes who shall be participants in a review, and reg 28K provides that a review hearing is to be in private unless the parties to the review agree that a review hearing or part of it may be conducted in public, and provides further that the presiding member of the Tribunal may give written directions as to persons who may be present at the hearing.
11 Regulation 28E provides that all the parties to a determination by the Commission, on giving notice of a desire to participate in the review, are entitled to participate in the review. Regulation 28E(2) provides that the Tribunal may, upon such conditions as it thinks fit, permit a person to intervene in a review, and reg 28E(3) provides that the parties to a review are any party to the determination who participates in the review and any person permitted to intervene in the review. Optus and Macquarie applied under reg 28E(2) to intervene. Telstra opposed their intervention.
12 There is no express requirement in reg 28E(2) which conditions the grant of permission to intervene upon the establishment of a “sufficient interest” in the subject matter of the review. In the course of argument the parties questioned whether a requirement of a “sufficient interest” was nevertheless imposed by the substantive provisions of Part XIC, or as a matter of general principle having regard to the purpose and structure of Part XIC and the nature of the proceedings before the Tribunal.
13 A review by the Tribunal is a re-arbitration, with the Tribunal exercising the same powers as the Commission. Section 152CO, which appears in sub-division C of Division 8, dealing with arbitrations by the Commission, provides:
“The parties to the arbitration of an access dispute are as follows:
(a) the carrier or provider;
(b) the access seeker;
(c) if the Commission is of the opinion that the resolution of the access dispute may involve requiring another person to do something – that other person;
(d) any other person who applies in writing to be made a party and is accepted by the Commission as having a sufficient interest.”
14 Under s 152CO(d) the establishment of a “sufficient interest” is a pre-requisite to joinder as a party to the arbitration of an access dispute. If it be assumed, for the moment, that there were no reg 28E, we consider that the combined operation of the provisions of s 152DO and s 152CO(d) would entitle a person other than the carrier or provider and the access seeker to be made a party to the re-arbitration before the Tribunal, but subject to the Tribunal accepting that the other party had a sufficient interest. In that situation we think it is clear that the requirement of a sufficient interest would arise as a requirement of the Act.
15 In our opinion the introduction of reg 28E does not alter that situation. The Act cannot be amended by the promulgation of a regulation. The regulation however supplements the provisions of the Act by expressly providing that permission to intervene and become a party to a review is discretionary, and that permission may be granted on conditions. The requirement of “a sufficient interest” nevertheless remains a prerequisite to the grant of permission, that prerequisite arising under s 152CO.
16 The concept of a “sufficient interest” is not defined in the Act or regulations. It is however an expression that is now used in s 101 of the Act which provides that a person dissatisfied with a determination by the Commission in an authorisation matter under Part VII of the Act may apply to the Tribunal for a review of the determination: see s 101(1AA). In the case of a person who was not an applicant for authorisation, if the Tribunal is satisfied that the person has a “sufficient interest”, the Tribunal must review the determination. That requirement of “sufficient interest” was considered by the Tribunal in Application by Wylie Steel Pty Ltd for review of grant of authorisation to Broken Hill Proprietary Company Limited (1980) ATPR 40-170, and in Re Wakeman (1999) ATPR 41-675. In the former case Lockhart J, sitting as the Deputy President of the Tribunal said at 42, 344:
“It is not necessary to define the various categories of persons who may have a ‘sufficient interest’; but they include a person who establishes that his business interests or prospects could be adversely affected by the proposed merger.”
and later at 42,345:
“… subsec 101(1) requires that before proceeding with the review of the determination of the Commission, the Tribunal must be satisfied that the applicant, not being the applicant for the authorisation, has made out a prima facie case that it has a ‘sufficient interest’. The test is not an unduly high one. If it were, it may involve determining the very questions that will loom large in the hearing on the merits of the determination including the allegations of Wylie Steel to which we have referred. These are hardly matters that fall for determination at this stage. If it emerges during the course of the hearing that the applicant in truth may not have a ‘sufficient interest’ the Tribunal may then review the locus standi of the applicant and consider the future course of the application for review.”
17 That decision of the Tribunal was considered by a Full Court in Broken Hill Pty Co Ltd v Trade Practices Tribunal & Others (1988) ATPR 40-173. The decision of the Tribunal was set aside on grounds unrelated to the question of “sufficient interest” but Bowen CJ said that he would not disagree with the Tribunal’s statements or approach to the question of “sufficient interest” and Franki J said that the Tribunal’s approach “was not wrong”. As the Tribunal observed in Re Wakeman, whilst Lockhart J said that the test of “sufficient interest” was not an unduly high one, that statement was made in the context of considering how far the Tribunal should go into the merits on a preliminary application to determine whether an applicant has shown a “sufficient interest” to require the Tribunal to enter into the review. In that case the sufficient interest alleged by Wylie Steel included an assertion that the proposed merger could result in a refusal of supply of steel product to Wylie Steel by the merged entity. That was an allegation of an adverse effect flowing directly from the proposed merger that would have been both substantial and particular to Wylie Steel.
18 In Re Wakeman, the Tribunal referred to statements of principle on questions of locus standi or sufficient interest to bring civil proceedings to challenge administrative decisions, and concluded that these statements of principle whilst helpful were not decisive of the meaning of the expression “sufficient interest” in the Act: at 42,633 to 42,635. The Tribunal concluded that the expression “sufficient interest” must be interpreted in the context of s 101 and having regard to the purpose of the Act, and to the purpose of the limitation which the expression imposed on the power of the Tribunal to review a determination of the Commission. By parity of reasoning, in the present case we consider that the requirement of a “sufficient interest” in s 152CO is to be interpreted in the context of the regime for the resolution of disputes established under Part XIC.
19 Mr Maxwell QC, senior counsel for Telstra, contended that the sufficiency of interest of a proposed intervener must be determined by reference to the purpose and structure of Part XIC, and of Division 8 in particular, the nature of the proceeding before the Tribunal, and the nature and extent of the applicant’s interest. So far we agree.
20 Mr Maxwell argued that each proceeding before the Tribunal is sui generis. It is an arbitration, to be held in private (reg 28K), of an access dispute between two commercial parties. The bilateral nature of the proceeding distinguished it from a public inquiry into access pricing including inquiries of the kind conducted in relation to the access undertakings given by Telstra, from an application under s 101 of the Act, and from civil proceedings in which issues of locus standi have been considered. It was argued that Division 8 of Part XIC is concerned with the resolution of specific access disputes between specific parties, and that it was inconsistent with the nature of such a proceeding to allow the intervention of other parties whose presence might broaden the ambit of issues before the Tribunal, and delay the resolution of the specific bilateral dispute. The fact that the determination of an access price in either of the present disputes will have implications beyond the parties to dispute, for example by affecting the price at which services are on-sold by AAPT or Primus to their respective customers, did not establish a sufficient interest. Such an effect would flow from every decision of a tribunal or court which set a precedent. Mr Maxwell also relied on the fact that the Commission during the initial arbitration of AAPT’s access dispute had refused Optus permission to intervene under s 152CO(d).
21 Whilst the particular access disputes over price between Telstra and AAPT, and Telstra and Primus are disputes between two commercial parties, and in that sense bilateral in nature, as counsel for the parties seeking intervention, and the Commission pointed out in their submissions, there is also an important public character by virtue of the place which arbitration has in the scheme of Part XIC, and by virtue of the object of the Part stated in s 152AB namely:
“The object of this Part is to promote the long-term interests of end-users of carriage services or of services provided by means of carriage services.”
Sub-section 152AB(2) provides that for the purposes of Part XIC, in determining whether a particular thing promotes the long term interests of end-users of either carriage services or services supplied by means of carriage services (together called “the listed services”) regard must be had to the extent to which the thing is likely to result in the achievement of the following objectives:
· the objective of promoting competition in markets for listed services;
· the objective of achieving any-to-any connectivity in relation to carriage services that involve communication between end-users; and
· the objective of encouraging the economically efficient use of and economically efficient investment in the infrastructure by which the listed services are supplied.
22 In furtherance of the object of Part XIC, s 152CR provides matters that the Commission must take into account in arbitrating an access dispute. Section 152CR(1) provides:
(1) The Commission must take the following matters into account in making a final determination:
(a) whether the determination will promote the long-term interests of end-users of carriage services or of services supplied by means of carriage services;
(b) the legitimate business interests of the carrier or provider, and the carrier’s or provider’s investment in facilities used to supply the declared service;
(c) the interests of all persons who have rights to use the declared service;
(d) the direct costs of providing access to the declared service;
(e) the value to a party of extensions, or enhancement of capability, whose cost is borne by someone else;
(f) the operational and technical requirements necessary for the safe and reliable operation of a carriage service, a telecommunications network or a facility;
(g) the economically efficient operation of a carriage service, a telecommunications network or a facility.”
23 The object of Part XIC is the promotion of a wider public interest which transcends either the immediate or long term interests of the particular parties to an access dispute. The object is the promotion of interests of a public nature. As counsel for AAPT contended, there is a tension between the bilateral nature of an access dispute, and the provisions of the Act and regulations which prescribe that the arbitration will be conducted in private unless the parties otherwise agree on the one hand, and, on the other hand, the public interest aspects of the terms and conditions on which access is granted. In the present case, the mere identification of the access dispute as one between two particular parties does not of itself deny that other parties may have a sufficient interest to allow intervention. We consider it is necessary to go further into the issues involved in the arbitrations, and the particular interests asserted by each of the parties seeking to intervene.
24 Mr Suckling, the Group Manager of Regulatory Affairs of Optus, summarises in an affidavit in support, the reasons why Optus seeks leave to intervene in the review. Paragraph 3 of his affidavit reads:
“3. Optus has an interest in the Australian Competition Tribunal’s (Tribunal) determination of Telstra’s Application for Review by Australian Competition Tribunal (Application) for the following reasons:
(a) Telstra provides local telephony fixed network connections to most Australian residential and business customers, accounting for approximately 95% of local access lines to customers. In order to provide a number of telecommunications services, carriers such as Optus must obtain domestic PSTN originating and terminating access services (the declared services) from Telstra using these network components;
(b) Determinations and actions made by regulatory bodies such as the Tribunal and the ACCC in relation to the terms and conditions of access, including price, to declared services have an industry wide effect because:
(i) the ubiquity of Telstra’s public switched telephone network (PSTN) means that most carriers must obtain declared services from Telstra;
(ii) the determinations and actions made by regulatory bodies set a benchmark as to the minimum and maximum price at which Telstra will provide the declared services to other carriers;
(c) Optus is the largest acquirer of the declared services, except for the declared services that Telstra acquires from itself. The price Telstra charges Optus for providing the declared services is a very significant factor in determining the price Optus sets for the provision of services to its customers (where Optus requires the declared services in order to provide its services);
(d) Optus is involved in an arbitration with Telstra regarding the price at which Telstra provides Optus with access to Telstra’s unconditioned local loop service (ULLS), which involves a determination of the cost to Telstra of providing the ULLS, based on the costs of the network which provides the ULLS. That network is the same network that Telstra uses to provide the declared services and the ACCC is using the same cost model, as used for the declared services, to determine the price of ULLS;
(e) Optus is the largest provider of the declared services after Telstra;
(f) The ACCC has indicated that the price at which non-dominant carriers can provide the declared services will be set by using the price at which Telstra provides the declared services as a guide;
(g) Optus is involved in a dispute with AAPT regarding the price at which Optus provides AAPT with the declared services; and
(h) Optus has been extensively involved in discussions and processes leading to:
(i) the n/e/r/a costs model, released in October 1998, under which the ACCC (with some small changes) costs the declared services; and
(ii) the ACCC rejection of Telstra’s access undertaking in respect of the declared services dated 24 September 1999 (Telstra Access Undertaking), by way of a report called: Report on the assessment of Telstra’s Undertaking for the declared services, dated July 2000 (ACCC Undertaking Report). The ACCC Undertaking Report is the most significant recent public statement made by the ACCC regarding the manner in which it will determine disputes over price for the declared services. The ACCC Undertaking Report rejected the proposed prices in the Telstra Access Undertaking, which are the same as those now proposed in paragraph 6.7 of Telstra’s Application. The Telstra Access Undertaking also raised issues regarding whether or not the n/e/r/a cost model was appropriate as a model for costing Telstra’s PSTN in order to determine the costs that Telstra incurs in providing the declared services. Optus was able to provide the ACCC with significant submissions in relation to the appropriate inputs into the n/e/r/a cost model, and in relation to the n/e/r/a cost model itself. Many of the inputs used to populate the present cost model are Optus data. Optus, as the only operator other than Telstra with a widely deployed residential network, possess unique evidence relevant to the PSTN Network, and wishes to be able to continue its involvement in the provision of data and submissions in relation to the issues.”
25 The reasons advanced in pars (a) to (c) articulate the precedent aspect which the determination of terms and conditions in one access dispute is likely to have upon the resolution of other access disputes. Not uncommonly the curial resolution of a dispute establishes a precedent effect which determines the outcome of other disputes between different parties. The precedent effect is not a sufficient reason in itself to allow intervention in proceedings before a court of other parties whose businesses will be affected by the flow-on effect of the decision. We do not think it provides a sufficient interest to ground an application to intervene in the present reviews. Similarly, we do not think the ground advanced in par (d), which concerns the fixing of a price for different services, provides a sufficient interest for intervention, even though the price fixed for domestic PSTN Originating and Terminating Access Services may have a precedent effect in fixing the price of unconditional local loop services.
26 However, we think the grounds for intervention advanced in pars (e) to (h) taken together, and the history of the present access disputes, do establish a sufficient interest on the part of Optus. The role of Optus in the events which have happened so far appears quite out of the ordinary.
27 Mr Suckling deposes that in July 1977 the Commission published Access Pricing Principles-Telecommunications. The introduction to those Principles outlined the tasks of the Commission under Part XIC, including the function of arbitrating disputes between parties concerning the terms and conditions of access to declared telecommunication services. The introduction to the Principles continues:
“These tasks involve approving or determining a price for a declared service or a method for ascertaining a price. The purpose of this document is to inform industry, government and other interested parties of the principles that will guide the Commission when considering access pricing issues for declared services under Part XIC…”
28 The major pricing principle contained in the Access Pricing Principles is that an access price should in general be based on the total service long run incremental cost to providing the service, that is, the price of the service should not exceed the minimum cost an efficient firm would incur in the long run to provide the service. In 1997 and 1998 when the Access Pricing Principles and the cost model based on the Principles, were being developed, Telstra and Optus were the only providers of substantial fixed telecommunication networks in Australia, and they were therefore the only sources of Australian data on costs inputs for the cost model. Optus asserts that evidence provided by it to the Commission has been instrumental in informing the Commission in order that the Commission might make decisions about the way Telstra’s PSTN should be costed, and the actual cost of the PSTN. The n/e/r/a cost model figures prominently in the July 2000 report. The n/e/r/a report was commissioned by the Commission from The National Economic Research Associates. Optus says that data provided by it and Telstra were the only sources of Australian data used by n/e/r/a and the final n/e/r/a cost model was influenced strongly by Optus empirical data in submissions.
29 The July 2000 report makes particular reference to Optus’ submissions on a number of issues and parts of the report are based on them.
30 In the July 2000 report, the Commission at par 2.4 noted that it was then conducting three arbitrations in relation to the declared PSTN services supplied by Telstra. Two of those disputes were those notified by AAPT and Primus. The Commission stated:
“In each arbitration, the price at which Telstra supplies the declared PSTN services is the central issue in dispute. The Commission proposes to use the results of its analysis, as set out in this report, as an input to the arbitrations for those disputes. This does not, however, mean that each service provider will receive the same price; the actual price will depend on the circumstances of each case (such as, for example, the traffic profile of the relevant service provider).”
31 Optus contends that to the extent that the n/e/r/a cost model figures prominently in the July 2000 report, the n/e/r/a cost model has played and will continue to play an important role in the way in which the Commission determines appropriate prices for declared services. The present contracts for the supply of the declared services by Telstra to Optus expires on 31 March 2001. The continued supply of the declared services to Optus thereafter will be a matter for price agreement between the two parties. On 21 September 2000 the Commission issued a press release referring to the completion of the arbitration of the two access disputes by AAPT and Primus. The press release included the following statement:
“In finalising these access disputes the ACCC had regard to its previous, extensive work on estimating the efficient costs of using Telstra’s network as part of assessing Telstra’s access undertakings for the same services. The debate over interconnection has been ongoing for three years, largely as a result of Telstra providing undertakings to the ACCC that it could clearly not accept.”
32 Optus contends that the July 2000 report established a benchmark that the Commission has already applied, and proposes in the future to apply, in the resolution of pricing issues. When the Commission rejected the second access undertaking in July 2000 following a public inquiry, Telstra could have sought a review of that decision by the Tribunal under s 152CE. Had it done so, the hearing would not have been one subject to the privacy provisions of the Act, and as the access undertaking, if accepted, would establish terms and conditions for the supply of the declared services to Optus, Optus would have had a sufficient interest to intervene in those proceedings. However Telstra decided not to seek review under s 152CE but, as events now show, decided to challenge particular prices determined in individual access disputes.
33 Optus contends that Telstra’s applications are in substance a challenge to the July 2000 report, and the results of the Commission’s analysis which it has indicated it proposes to apply generally. The present reviews, insofar as they do attack the Commission’s analysis raise issues upon which Optus has in the past made substantial submissions, and supplied relevant data to achieve an outcome which would directly affect the price for the supply of declared services to Optus.
34 Moreover, Optus contends that it has developed an expertise and sophisticated understanding of the issues raised in the application that is equal to that of any other party to the reviews. It asserts that it has available to it unique and valuable evidence regarding the efficient cost of owning and operating a large telecommunications network in Australia, whereas neither AAPT nor Primus have substantial network infrastructure which would enable them to challenge Telstra’s evidence regarding the costs of its PSTN, with comparative evidence of their own. Optus says it has available valuable evidence regarding the management and technical nature of a PSTN network, based on its own experience, and on its dealings with Telstra. Optus has offered telecommunications services in Australia and dealt with Telstra for much longer than AAPT or Primus and is thus best able to make submissions on this point and to challenge arguments made by Telstra.
35 Whereas in submissions to the Tribunal Telstra sought to down play the benchmark effect which the outcome of the present reviews would have on future pricing arrangements between Telstra and Optus, saying that the outcome of the decisions would, at most, have no more than a precedent value akin to the precedent value of one court decision upon the outcome of a dispute of a like nature between different parties. In our view, that submission overlooks the contribution which Optus has made to the Commission’s analysis, reported in the July 2000 report, and to the direct application of that analysis to pricing issues between Telstra and Optus. In our opinion the information put before the Tribunal by Optus indicates that the review will challenge the results of the Commission’s analysis and in doing so will call into question the submissions and data of Optus. Moreover, the outcome of the reviews will in a direct and immediate way affect the future price of the declared services provided to Optus. In a practical sense, the reviews will involve an arbitration of essential components of the future pricing structure between Telstra and Optus. If there could be any doubt about that, the doubt is dispelled by the terms of a press release issued by Telstra on 13 December 2000 which contains the following statements:
“Telstra and AAPT, and Telstra and Primus will appear for a directions hearing before the Australian Competition Tribunal this Friday in their respective PSTN arbitration disputes.
Telstra has requested that the Tribunal address fundamental issues surrounding the appropriate methodology for determining the price others should pay for interconnecting with Telstra’s network.
…
Telstra’s Director of Regulatory, Ms Deena Shiff, said the issue of appropriate interconnect charges had been debated in public with the ACCC for some time, and that the matter was now before the Australian Competition Tribunal for resolution…
…
This appeal to the industry umpire, the Australian Competition Tribunal, is the only way this long running dispute over the cost of competitors using Telstra’s network can be finalised for the whole industry.
‘The Tribunal’s determination will replace the ACCC’s findings. Telstra is also hopeful that its decision will set the industry benchmark and expectations about how these prices should be determined,’ Ms Shiff said.”
36 The press release then identified eight basic points which Telstra believes the Tribunal should fully consider in arriving at an appropriate methodology for determining the price of Telstra’s interconnect service, to ensure that Telstra’s network is not undervalued and future investment in the industry is not discouraged. Those points are of a generic nature, not peculiar only to either AAPT or Primus.
37 Having regard to the history of the matter we consider that Optus has a sufficient interest in the two review applications before the Tribunal, and should be given leave to intervene and become a party. At this stage it is too early to specify the conditions upon which that intervention will be permitted. The parties in argument acknowledged that in addition to generic questions upon which Optus wishes to be heard, it is probable that there will be commercially sensitive matters peculiar to AAPT or Primus, such as traffic profiles, to which Optus should not become privy.
38 We do not think the rejection by the Commission of Optus’ application to intervene in the original AAPT arbitration assists Telstra. A substantial reason for that decision appears to have been that the Commission did not consider its arbitrated determination would set a benchmark. The Commission in its reasons for not permitting intervention said:
“30. The impact of any discussion or determination by the Commission of pricing principles on subsequent negotiations in the industry is difficult to assess. The Commission does not consider that an arbitrated determination would set an industry benchmark, as suggested by Optus. As explained below, the Commission does not propose to articulate principles intended to have general application during the course of this particular arbitration. The Commission has previously issued public documents articulating its views on Access Pricing Principles. These documents are kept under general review separate to specific arbitrations. Even if, as a practical matter, the Commission’s discussion or determination of pricing principles does tend to influence subsequent industry negotiations, the effect of the arbitration on Optus would only be of an indirect or consequential nature.”
39 Unlike the arbitration by the Commission, the re-arbitration by the Tribunal will directly raise for consideration the Commission’s analysis contained in the Commission’s public documents, and is intended, at least by Telstra to set an industry benchmark.
40 We turn now to the position of Macquarie. Macquarie is not an access seeker for the declared services. It is an acquirer of other wholesale services from carriers including Telstra and Optus which it resells as a component part of voice services, data services, and day to day management of telecommunication facilities. The effect of the Tribunal’s determination, even if it does establish a benchmark for the pricing of the declared services will be an indirect one in common with consequential effect that the price of access to the declared services is likely to have on a wide range of intermediate and end-users of carriage services. Macquarie, like all those other users has an interest, but we do not think the interest is a “sufficient interest” for the purpose of Part XIC. If it were, intervention by numerous users of other carriage services and services supplied by means of carriage services would be permissible under s 152CO. This cannot be the intention of the Act, as to allow the intervention by numerous people would frustrate the arbitration process envisaged by Part XIC, including the object of protecting commercially sensitive information to be achieved by requiring hearings to be in private under s 152CZ, and for the arbitration procedure to be expeditious: see s 152DB.
41 Macquarie, like Optus, also argued that the July 2000 report established a benchmark for the industry in negotiating access arrangements, and that the reviews presently before the Tribunal represent a challenge to the regulatory approach to pricing that has governed the telecommunications environment since deregulation in mid-1977. The affidavit of Maha Krishnapillai filed in support of Macquarie’s application for intervention also deposes to Macquarie’s participation in the Commission’s inquiry and analysis culminating in the July 2000 report.
42 That the outcome of the Tribunal’s determinations in these reviews may have a precedent effect that becomes an industry benchmark is not in itself a “sufficient interest”. Apart from the fact that Macquarie is not an access seeker of the declared PSTN services, what distinguishes Macquarie’s position from that of Optus is the extent of Optus’ involvement in the assessment of the access undertakings given by Telstra, and the fact that the Commission’s ultimate analysis involved an acceptance of submissions and data emanating from Optus. The information presently before the Tribunal indicates that whilst Macquarie made submissions to the Commission, and provided a representative to the Information Data Working Group which assisted the Commission and its costing consultants, including n/e/r/a, in the analysis of Telstra’s cost information, that participation was of an altogether different order to the extent of the involvement of Optus in the assessment of Telstra’s undertakings and the formulation of the costing model ultimately adopted by the Commission.
43 The application by Macquarie to intervene will therefore be refused.
I certify that the preceding forty-three (43)
numbered paragraphs are a true copy of the
Reasons for Decision of the Tribunal
Associate:
Dated:
Counsel for Telstra Mr C K Maxwell QC with Mr Connock
Solicitors for Telstra Mallesons Stephen Jacques
Counsel for AAPT Mr D Shavin QC
Solicitors for AAPT Corrs Chambers Westgarth
Counsel for Primus Mr C Jose
Solicitors for Primus Matthew Nicholls
Counsel for Optus Mr S J Gageler SC
Solicitors for Optus Gilbert & Tobin
Counsel for ACCC Mr S J Rushton SC with Mr A I Tonking
Solicitors for ACCC ACCC Legal Group
Counsel for Macquarie Mr D M Yates SC
Solicitors for Macquarie Gilbert & Tobin
Date of hearing 15 December 2000
Date of decision 21 February 2001