ACCC issues draft decision on Telstra's ULLS and LSS undertakings on monthly charges
The Australian Competition and Consumer Commission today issued its draft decision on Telstra's Unconditioned Local Loop Service (ULLS) and its Line Sharing Service (LSS) monthly charges undertakings.
The two services, which allow access to the basic elements of Telstra's customer access network, are considered key inputs into the development of facilities based competition in Australian telecommunications, providing greater benefits for end users.
"The ACCC's draft decision is to reject Telstra's monthly charges undertakings for the ULLS and the LSS", ACCC Chairman, Mr Graeme Samuel, said.
"In its assessment of Telstra's undertaking for the ULLS the ACCC believes that Telstra's proposed monthly charges are not reasonable".
The ACCC has formed a preliminary view that on any reasonable basis of cost and cost recovery approach, the charges specified in the undertakings are too high. Even on the basis of revised demand estimates provided by Telstra, reasonable prices for the monthly access charges for both services are materially lower than those previously considered by the ACCC and proposed in the new undertakings.
"Further, if the ACCC was to agree to a different method of cost recovery for ULLS and LSS-specific costs, as it has foreshadowed previously, the appropriate charges would be significantly below those proposed by Telstra. Similarly, the ACCC considers that Telstra's preference for additional surcharges on the prices of ULL services, which, if accepted, would make their proposals more reasonable, cannot be justified.
"Overall, Telstra's proposed prices do not reflect the efficient costs of supplying the services and therefore are not reasonable. The proposed prices will not promote competition, and are likely to discourage efficient investment in and use of infrastructure by both Telstra and access seekers".
The ACCC has previously commented on the history of rejected undertakings for these services over recent years, and the associated delays to the resolution of key issues which have arisen as a result.
"The ACCC is particularly concerned that Telstra's submissions continue to raise issues on which the ACCC has already formed concluded views. Telstra's continued insistence on repeated consideration of these issues through multiple undertaking processes, plus delays in the provision of relevant supporting material, has substantially delayed satisfactory industry-wide outcomes, contrary to the policy intentions underlying the undertakings process.
"Such delays in industry outcomes are of particular concern at this time given the prospect of substantially greater take-up by competitors of these services", Mr Samuel said.
Separate work on Telstra's ULLS and LSS connection/disconnection charge undertakings is continuing and a decision on these will be released in due course. The ACCC remains concerned, however, that the connection charge undertakings provide no real certainty to access seekers that they will not be used by Telstra to indiscriminately apply to any connection scenario, whether of a single event or mass migration nature. This and other aspects of the undertakings will be relevant to the ACCC's decision on whether these connection charge undertakings will be accepted.
Copies of the ACCC's draft report and other documentation relevant to the access undertakings (including the undertakings, Telstra's supporting submissions and other material) are available on the ACCC website.
The ACCC seeks submissions by interested parties on its draft view by no later than 2 September 2005.
Media inquiries
Mr Graeme Samuel, Chairman, 0408 335 555
Mr Michael Cosgrave, Group General Manager, Communications Group, (03) 9290 1914or 0416 043 160
On 13 December 2004 Telstra submitted access undertakings for ULLS monthly charges, ULLS connection charges, LSS monthly charges and LSS connection and disconnection charges. All four undertakings provided pricing for the 2004-05 and 2005-06 financial years. A draft decision relating to the assessment of the ULLS and the LSS connection/disconnection charges undertakings will be released shortly.
The current undertakings follow rejection of ULLS monthly charge undertaking submitted by Telstra on 14 November 2003 and 9 January 2003 and LSS monthly charge undertakings submitted on 1 September 2003.
Telstra proposes the following ULLS monthly charges:
