Telstra makes peace with rivals

By PETER GRIFFIN

Building a foothold in Australia looks unlikely to get any easier for Telecom-owned AAPT now the market's dominant company, Telstra, has struck a deal with AAPT's rival, Optus.

Telstra said yesterday that it had settled several arbitration disputes before the Australian Competition and Consumer Commission.

They involved four rival telcos, including Optus, Primus and AAPT.

Although Telstra was able to reach public switched telephone network (PSTN) interconnect and local carriage deals with the second-ranked Optus, it did not reach an agreement with AAPT on PSTN to end a long-running dispute between the two companies.

But Optus said it would withdraw from arbitration before the ACCC over local access service as a result of its new agreement with Telstra.

And last night Telstra spokesman Graeme Salt confirmed that a new agreement on local call wholesale pricing had been reached with AAPT.

"In the case of local calls, only 7 per cent of the market is now going to be subject to ACCC regulations," he said.

"The rest of it is being determined commercially with AAPT and others."

AAPT spokeswoman Jessamy Mahony said the new wholesaling deal did not affect the company's decision last month to stop offering local call services to new residential customers.

AAPT has said Telstra's wholesale prices make such services uneconomic.

The agreements between Telstra and its rivals reduce the remaining number of arbitration hearings before the ACCC from 19 to 11 and the number of areas of conflict to four - unconditional local loop, pay TV, data call termination and local calls with a handful of other carriers.

Meanwhile industry speculation across the Tasman is that Australian telecoms company Hutchison will overrun its $A1 billion ($1.21 billion) budget for building the country's first third generation (3G) network.

Telecom has a 19.9 per cent stake in the 3G venture, expected to be in place in Australia by early 2003.

Last week analysts estimated Hutchison's costs could be between $2 billion and $3 billion.

Telecom spokesman Martin Freeth said Telecom's contribution was capped at $400 million.

Tim Smeallie, telecoms analyst at UBS Warburg, estimated capital expenditure on the project could reach $1.8 billion, presuming a customer base of 300,000.

He said many of the estimates being made included software development costs, but in Hutchison's case, its parent had done much of the development work.

"They will have some software costs customising it for local content, but in terms of applications they're well placed."