ACCC proposes line sharing service access charge of $7-$9

The Australian Competition and Consumer Commission today proposed a monthly access charge for Telstra's Line Sharing Service (LSS) of around $7-$9 per service.  This recommendation comes as part of the ACCC's final decision to reject Telstra's LSS access undertaking.

The LSS is a service that enables two carriers to provide separate services over a single metallic pair or 'line'.  It allows Telstra to supply basic telephone services to a consumer while also enabling its competitors to provide high‑speed broadband services, such as ADSL, to the customer on the same line. 

ACCC Chairman, Mr Graeme Samuel, said that it was the ACCC's final view that the LSS undertaking should be rejected, largely because the proposed monthly access charge of $15 per service was well above efficient costs.

"The ACCC has formed a view that the monthly charge of $15 per service is not reasonable as it is significantly higher than what would be justified by the efficient costs of supplying the service.  Such a price will not promote competition, as it is unlikely to encourage service providers to invest in their own facilities to provide broadband services.  It is also unlikely to encourage efficient use and investment in infrastructure by Telstra".

According to the ACCC's view of efficient costs, the monthly charge should be closer to $7-$9 per service.

The undertaking was lodged on 1 September 2003 and the ACCC has consulted widely to ensure interested parties have had an opportunity to fully express views and provide relevant information.  It has also sought further information from Telstra on costs and other aspects of the supply of the service to better inform its assessment.

Ordinarily, under the Trade Practices Act 1974, the ACCC has six months to determine whether to accept or reject a proposed undertaking.  However, in this instance, the need for further information on costs and other matters has led to the assessment process to be extended.

The ACCC’s final report, as well as the undertaking and Telstra's supporting submissions and other public submissions from interested parties, are available on the ACCC website (see below).

Background

Access undertakings

Part XIC of the Trade Practices Act 1974 establishes a telecommunications-specific regime for facilitating access to the networks of competing carriers.

Under Part XIC, providers of a declared service (access providers) must comply with standard access obligations which compel them to supply that service to access seekers.

Part XIC also makes provision for an access provider to lodge access undertakings which may specify price and/or non-price terms upon which it proposes to meet its standard access obligations.

The ACCC is required to assess the proposed access undertakings. It must not accept the access undertaking unless:

• it has published the undertakings and invited submissions
• it has considered any submissions received within a prescribed time limit
• it is satisfied the undertakings comply with the standard access obligations
• it is satisfied the terms and conditions in the undertaking are reasonable and
• the undertaking expires within three years.

The service

The LSS was declared on 30 August 2002 following the ACCC's decision that declaration would be in the long-term interests of end-users.

Line sharing refers to a situation where two separate services are provided over a single metallic pair (or line) by two separate carriers.  Specifically, the LSS involves the access provider providing a voiceband PSTN service to an end-user, whilst providing access to another carrier (the access seeker) to simultaneously provide services to the same end-user over the high-frequency portion of the unconditioned local loop.  For example, if Telstra is the access provider, it could deliver voice services to end-users, while a second carrier could simultaneously provide high-speed data services (such as ADSL) over the same line.The LSS, therefore, allows the access seeker to use Telstra's PSTN network in combination with its own facilities.  In this way it enables the access seeker to provide differentiated broadband services to those retailed by Telstra.