Telstra will evade penalties exceeding AU$10 million despite not complying with all of the competition watchdog's demands by the November 30 deadline.

The Australian Competition and Consumer Commission (ACCC) slapped Telstra with a competition notice on September 7, 2001, giving the telco heavyweight twelve weeks to change what it deemed anti-competitive conduct. To comply Telstra would need to reduce wholesale ADSL pricing and improve access to its network for wholesale customers by November 30.

Whilst Telstra announced wholesale pricing reductions of about 30 percent and a deal with one competitor last week, its architecture improvements - a stripped down ADSL service called Layer 2 Tunnelling Protocol (L2TP) - is still in trial mode. A full product rollout won't happen until March next year, Telstra told ZDNet Australia in an interview last week.

Despite the ACCC's claims that a deal with one customer and a service that doesn't yet meet its expectations are insufficient to allay its concerns of anti-competitive conduct, it has decided to extend Telstra's deadline for compliance until mid March 2002.

"We toyed with the idea of letting the Competition Notice come into effect but decided it would be better to leave the Notice in place but defer it coming into effect," ACCC Commissioner Rod Shogren told ZDNet Australia. "If we revoked the Competition Notice there would be no pressure on Telstra to continue to do what it said it will do and meet its own deadline," he added.

When asked if the ACCC was being too lenient on the telco giant, Shogren said: "Our main focus is getting the right outcome for users and there's every prospect we'll get that without going down the penalty route." However, he conceded that Telstra -could've had all this in place if they had started earlier".

According to the Commissioner, Telstra has made -positive moves" in both areas, however, -it certainly doesn't have the sorts of services in place we believe it should have". Shogren also said that if Telstra managed to reach deals with everyone -the issue would go away".

-Telstra is still breaching the law but we decided that we should give them more time," he said.

When asked if penalties would be fired on the telco if it failed to meet next year's deadline, Shogren said: -We're confident by mid-March all this we be sorted out."

Telstra believes its new pricing structure will "hit the mark" and said it will be offering the new model to all its 20-odd FlexStream customers by March. "At least one customer has shown a lot of interest in the pricing," Telstra Wholesale's Graeme Salt said, referring to the deal it signed with South Australia-based Agile Communications last week.

"We will continue to work with customers and the ACCC and we believe by March they'll be fully satisified with what we've proposed," Salt added.

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