ACCC issues discussion paper on Telstra's new interconnection undertaking

The Australian Competition and Consumer Commission today issued a discussion paper on Telstra's new interconnection undertaking.

The undertaking, lodged with the ACCC on 24 September 1999, specifies the prices Telstra proposes to charge other carriers for interconnection with its fixed-line (PSTN) phone network. The undertaking proposes a headline rate of 2.3 cents per minute for 1999-2000 and 2.0cents per minute for 2000-2001.

Under the Trade Practices Act, the ACCC must accept or reject the undertaking based on whether the terms and conditions are reasonable.

"The undertaking, if accepted by the ACCC, will determine the terms and conditions on which other carriers obtain interconnection to Telstra's network in the absence of commercial agreement between the parties," ACCC Commissioner responsible for telecommunications, Mr Rod Shogren, said today.

"The ACCC intends to assess the undertaking in an open public process. All available information will be taken into account, including relevant material provided in the assessment of Telstra's previous undertaking, the effects of the changes to Telstra's price caps and the company's ability to achieve cost reductions over time".

Telstra has indicated to the ACCC that it considers that an expeditious consideration of the undertaking would best serve the interests of all those in the industry.

The ACCC intends to assess the undertaking under a tight timeframe and seeks comments on the undertaking by 12 November 1999.

Copies of the undertaking together with the discussion paper will be available on the ACCC web site early next week. The ACCC invites submissions on any aspect of the undertaking. During the period of the assessment of the undertaking, parties are free to continue to negotiate access to the services to which the undertaking would apply. If the parties are unable to reach agreement, the ACCC's powers to arbitrate disputes are not limited during the assessment period.

Background

Telstra has lodged an undertaking with the Australian Competition and Consumer Commission.

The undertaking specifies the terms and conditions on which Telstra proposes to meet its obligations under Part XIC of the Trade Practices Act 1974 to supply declared services to carriers and carriage services providers.

The undertaking covers services to allow carriers to interconnect with Telstra's fixed-line network. Interconnection allows the users of one network to communicate with the users of other networks.

Under Part XIC of the Act, the ACCC must accept or reject the undertaking based on the whether the terms and conditions are reasonable.

If the ACCC accepts the undertaking, the terms and conditions in the undertaking will apply if the parties cannot come to a commercial agreement. In this way the undertaking substantially reduces the role of the ACCC to arbitrate disputes between parties over the terms and conditions of interconnection.

The level and structure of interconnection prices have important implications for the development of competition and investment in the industry. Interconnection prices that are either too high or low can be detrimental to the long-term interests of end-users of telecommunications services.

The process the ACCC will follow to assess the undertaking will be open and public allowing parties to express their views on the undertaking, provide relevant information to assist the ACCC and allow comment on any analysis and preliminary views formed by the ACCC.

The lodgement of the new undertaking follows the ACCC's final decision to reject Telstra's previous PSTN undertaking in June 1999 on the grounds that the non-price terms and conditions were not reasonable.