Telstra's failure to comply with a Competition Notice demanding it play a fairer game in the wholesale arena will see the Notice come into effect today - leaving the telco heavyweight possibly facing legal action from disgruntled customers and the competition watchdog, which could chase penalties exceeding AU$10 million.

Telstra was slapped with the Competition Notice on September 7, 2001 by the Australian Competition and Consumer Commission (ACCC), which demanded it change its anti-competitive behaviour surrounding pricing and product offerings to wholesale customers.

Although Telstra made pricing amendments last year and said in an interview with ZDNet Australia just last week that it was confident its improved architecture - Layer 2 Tunnelling Protocol (L2TP) - would meet the ACCC's demands, the competition watchdog said that Telstra may have been doing quite a lot, but -we don't think they've been doing it quick enough".

-We've been checking with Telstra's customers and they tell us they've still not been offered products at a price that would meet our requirements," ACCC commissioner for telecommunications Rod Shogren, told ZDNet Australia.

Shogren said that the ACCC had questioned three of Telstra's -key" wholesale customers yesterday -- although he wouldn't say which ones. -We have spoken to customers and asked them specifically if they'd had a commercial offer made to them and they said 'no'," he said.

Although the Competition Notice was issued last year, the ACCC delayed it coming into effect after the telco giant failed to meet the original November 30 deadline. Telstra was still breaching the law but the ACCC decided to give it more time.

As it comes into effect today, Telstra's customers can, if they wish, seek compensation in court for losses incurred. Similarly, the Notice -will be a trigger for us to seek penalties from Telstra in Federal Court," Shogren said.

From the ACCC's point of view, this means a one-off penalty of AU$10 million, plus AU$1 million for each day of non-compliance.

However, the competition regulator, criticised in the past for its soft-touch approach to Telstra, said it would continue to monitor the situation for the next couple of weeks and will be looking to see what Telstra does.

-We're not rushing off to court today or tomorrow," Shogren said. "We are still hopeful all this will be sorted out in the next couple of weeks."

Telstra confirmed that it was aware of the ACCC's decision.

-We believe it is unnecessary and unjustified," Telstra Wholesale spokesperson Graeme Salt told ZDNet Australia. -We have had strong positive feedback from customers and we believe the ACCC is getting in the way of what is a successful commercial formula in the broadband space."

Asked if he thought things would be sorted out with the ACCC in the two-week leeway it has been granted before the ACCC pursues penalties, Salt said: -Given that we only launched DSL Layer 2 last week and we have already issued 13 contracts, we believe there is sufficient demand out there."

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