ACCC issues Telstra accounting separation report for June quarter 2005

The Australian Competition and Consumer Commission today issued its eighth imputation testing and non-price terms and conditions report under the enhanced accounting separation regime for Telstra. The report presents data from the quarter ending 30 June 2005.

The report presents key performance indicators that compare particular aspects of Telstra's customer support services when supplied to wholesale and retail customers. ADSL related performance indicators are being reported for the first time, in addition to basic access performance indicators.

The report also presents an imputation analysis that compares Telstra's retail prices to the prices of three core* telecommunications access services. The analysis is designed to reveal whether there are sufficient margins between Telstra's retail prices and the prices it charges other service providers to use the core services (plus related costs) to allow efficient firms to compete at the retail level.

The results for fixed line voice services show that there were sufficient margins for domestic and international long-distance calls and fixed-to-mobile calls, but not for local call services (line rental and local calls combined).

The results for services supplied over the unconditioned local loop core service (ULLS) show that there were negative margins when supplying residential customers, but slightly positive margins when using the ULLS to supply ADSL and four voice services to business customers.

"On the whole, there was little change in the key performance indicators and imputed margins during the June quarter", ACCC Chairman, Mr Graeme Samuel, said today.

*The three core access services are the local carriage service, the PSTN originating and terminating access service and the unconditioned local loop service (ULLS). The ULLS allows a competitor to lease the use of the customer's line to supply any combination of access, voice, ADSL or other data services.

Background

The accounting separation regime was introduced to address competition concerns arising from the level of vertical integration between Telstra's wholesale and retail services and also to improve the provision of price and cost information to the ACCC, competing telecommunications providers and the public.
On 19 June 2003, the Minister for Communications, Information Technology and the Arts directed the ACCC to issue record-keeping rules to Telstra, requiring Telstra to report on:

• current costs in addition to historical costs under the Telecommunications Industry Accounting Framework (CCA reports)
• imputation analysis comparing Telstra's retail prices and the costs faced by access seekers in purchasing certain core telecommunications services from Telstra (imputation reports)
• key performance indicators on non-price terms and conditions that compare Telstra's customer service performance between specified retail and wholesale supplied services (NPTC reports).

The direction requires that the ACCC make the reports publicly available and comment on the reports that are submitted. In accordance with the direction, the ACCC first issued record-keeping rules to Telstra in June 2003. The ACCC issued revised rules in September 2004.