ACCC accepts Telstra's revised access undertakings for PSTN and local call access services

The Australian Competition and Consumer Commission today decided to accept Telstra's revised access undertakings for PSTN originating and terminating services (PSTN access) and the local carriage service (LCS) and has issued a final report on its assessment of these undertakings.

This confirms the ACCC's draft view, issued in October 2004, and is the first time the ACCC has formally accepted access undertakings for Telstra's main fixed network services.

The undertakings specify the price and some non-price terms and conditions proposed by Telstra for access to the PSTN access services over three financial years. The terms and conditions for the local carriage service (LCS) apply for one financial year.

These core services enable Telstra's competitors to provide local, long-distance, international, fixed-to-mobile and mobile-to-fixed calls.

"Acceptance of the PSTN access undertaking will result in progressively lower PSTN access rates for Telstra's competitors", ACCC Chairman, Mr Graeme Samuel, said. "The acceptance of the LCS undertakings was primarily motivated by the short term nature of the undertakings and the desirability of a review of the LCS declaration and associated pricing principles over this period".

Before the ACCC's decision to finalise its views on these undertakings, Telstra notified the ACCC that it would withdraw its undertaking for the provision of the unconditioned local loop service (ULLS). This undertaking had been rejected by the ACCC in its October draft report.

Telstra has submitted new revised ULLS undertakings, which, amongst other things, remove the proposed ULLS price adjustment mechanism that was previously found not to be reasonable.   

"The ACCC accepts Telstra's withdrawal of the existing ULLS undertaking, which was seen as inadequate, however it is disappointed Telstra lodged revised ULLS undertakings without adequate consultation with the ACCC", Mr Samuel said.

In particular, the ACCC notes that there are significant increases in ULLS take up in prospect over the next one to two years, over and above what was previously estimated, which is likely to materially reduce the average costs of this service.

Copies of the ACCC's final report and other documentation relevant to the access undertakings (including the undertakings, Telstra's supporting submissions and other material) will be available on the ACCC website (see below).

Telstra submitted its revised access undertakings for core telecommunications services on 14 November 2003. They replace similar undertakings lodged by Telstra on 9 January 2003. The ACCC issued its preliminary view in relation to these undertakings on 12 December 2003, where it decided to accept the undertakings for the core services.

The prices proposed by Telstra's undertakings for these services are as follows:

PSTN O/T Headline rates based on the undertakings disaggregated rates and CLC inclusive call holding times and traffic distributions

Cents per call end minute
2003/04 1.2661
2004/05 1.1630
2005/06 1.0045

LCS
2004/05 13.61

Note:

Telstra made a commitment not to seek an Access Deficit Contribution (ADC) from 2006/07 if the PSTN O/T undertakings are accepted. The ADC is a contribution competitors make to Telstra to cover the difference between the costs associated with providing telephone lines to customers and the retail revenues that can reasonably be generated from those lines via line rentals and connection charges. The ADC currently represents almost 50 per cent of the PSTN charge