On 1 February 2006 the ACCC published a paper on the approach it intends to take in developing procedural rules for proceedings under the telecommunications access regime.
Under recent changes to the Trade Practices Act, the ACCC was provided with the broad power to make written rules that set out the procedures to apply in connection with matters arising under Part XIC of the Act. These rules can modify or displace some procedures currently set out in the Act.
The legislative amendments require the ACCC to publish a development plan outlining its proposals for making these procedural rules and an indicative time for making them. The ACCC will finalise the development plan in March 2006 after receiving comments from industry.
The procedural rule-making power is intended to facilitate more timely decision making and therefore provide greater certainty to industry participants. By giving the ACCC greater discretion to determine its own procedures, the power to make procedural rules will allow it to remove many of the sources of delay in the process.
For example, the ACCC may make procedural rules to allow:
minor modifications to undertakings or exemption applications currently under consideration by the ACCC without the need to restart full public consultation processes
it to specify the form and content of applications, undertakings, variations and other documents given to the ACCC under Part XIC
it to specify modifications to the current procedures for dealing with confidential information
it to specify a time limit by which parties must respond to requests from the ACCC for further information.
Submissions from interested parties were due on 22 February 2006. The ACCC will conduct further public consultation when it releases draft procedural rules later in the year.
Optus undertaking for mobile terminating access service
On 3 February 2006 the ACCC announced its final decision on the Optus access undertaking to supply its domestic GSM terminating access service. The ACCC rejected this undertaking because it considers the target price estimated by Optus is substantially above the cost of supplying this service.
The domestic mobile terminating access service (MTAS) is a wholesale input used by providers of fixed-to-mobile and mobile-to-mobile calls to allow their customers to call mobile phone users. It allows consumers (either fixed-line or mobile) to call mobile users connected to another network. The carrier whose customer initiates the call pays the carrier whose customer receives the call for the MTAS.
Optus lodged an ordinary access undertaking for its supply of its domestic GSM terminating access service with the ACCC on 23 December 2004. The undertaking relates to the supply of mobile termination on Optus’ 2G GSM network, which is a subset of the broader MTAS declared by the ACCC in June 2004.
The Act provides that the ACCC may only accept or reject an undertaking. Under s. 152BV of the Act, the ACCC must not accept an undertaking unless, among other things, it is satisfied that the terms and conditions specified in the undertaking are reasonable. In determining if the terms and conditions of an undertaking are reasonable, the ACCC must consider the:
long-term interests of end-users
legitimate business interests of the access provider
interests of persons who have rights to use the declared service
operational and technical requirements necessary for the safe and reliable operation of a carriage service, a telecommunications network or a facility
economically efficient operation of a carriage service, a telecommunications network or a facility.
Despite its further submissions on the draft decision to reject the undertaking, Optus failed to address the ACCC's concerns about this overestimation.
The ACCC remains concerned about the theoretical underpinnings of the methodology employed by Optus’ consultant, the application of this methodology, and also empirical concerns with some of the inputs used to generate the Optus price estimate of 17 cents per minute for 2007.
The ACCC currently has before it five access disputes in relation to Optus' supply of the MTAS, under the dispute resolution procedures in Division 8, Part XIC of the Act. Had the ACCC accepted Optus’s undertaking it would have been obliged to make determinations in those disputes that were consistent with the terms and conditions proposed in the undertaking. These arbitrations are continuing.
On 20 February 2006 Optus applied to the Australian Competition Tribunal for review of the ACCC’s decision to reject the Optus access undertaking.
Three telecommunications access disputes have been notified to the ACCC under Part XIC of the Trade Practices Act.
Hutchison Telecommunications (Australia) Ltd and Hutchison 3G Australia Pty Ltd each notified the ACCC of an access dispute with Telstra Corporation Limited.
Both of these disputes relate to the price paid by HTAL and H3GA for the domestic MTAS supplied by Telstra.
The domestic MTAS is a wholesale input, used by providers of fixed-to-mobile and mobile-to-mobile calls, to allow their customers to call mobile phone users. It allows consumers (either fixed-line or mobile) to call mobile users connected to another network. The carrier whose customer initiates the call pays the carrier whose customer receives the call for the MTAS.
The disputes relate to the charges, and other terms and conditions, for carrying that portion of a call that terminates on Telstra's mobile network and Vodafone's mobile network.
Telstra Corporation Limited has also notified the ACCC of an access dispute with Vodafone Network Pty Limited, under Part XIC of the Act.
The dispute relates to:
the price paid by Telstra for the domestic MTAS supplied by Vodafone by means of its mobile network
certain terms and conditions on which Vodafone proposes to supply this service.
The ACCC has begun the arbitration processes for these access disputes.
The ACCC is vested with arbitration powers enabling it to make directions and ‘do all things necessary for the speedy hearing and determination of an access dispute’. For the ACCC to engage in arbitration, an access seeker and/or an access provider must notify the ACCC of an access dispute. The ACCC may arbitrate an access dispute only when:
a declared service is supplied or proposed to be supplied by a carrier or carriage service provider
one or more standard access obligations apply or will apply to the carrier or carriage service provider in relation to the declared service
an access seeker is unable to agree with the carrier or carriage service provider on the terms and conditions on which the carrier or carriage service provider is to comply with the standard access obligations.
When a dispute cannot be resolved after private negotiations, mediation and/or conciliation, either of the access parties may refer the matter to the ACCC. Arbitration by the ACCC would be considered as a final solution for the parties in dispute. When the ACCC is notified of an access dispute it must determine the matter, unless it decides to terminate the arbitration or the notification is otherwise withdrawn.
Pass-throughs and revenue-cap re-openers—position paper
On 21 December 2005 the AER released a position paper on pass-throughs and revenue cap re-openers to clarify its position for the Powerlink review process. That paper considered approaches available to the AER to vary a transmission network service provider’s (TNSP’s) revenue cap allowance within a regulatory period in response to exogenous events. In the position paper the AER indicates a preference for replacing the revenue cap re-opener provisions specified in the statement of regulatory principles with pass-through arrangements.
On 16 February 2006 the Australian Energy Market Commission (AEMC) released its draft national electricity amendment rule in which the AEMC proposes to adopt substantially the same pass-through categories as set out in the AER discussion paper.
Therefore the AER proposes to suspend its consideration of this matter, subject to any variation in the final amendment rule.
The AER is required under the national electricity rules (the rules) to develop and issue guidelines for the confidentiality of information obtained, used and disclosed to resolve a dispute under the dispute resolution process established by chapter 8 of the rules.
To help the AER develop its confidentiality guidelines, interested parties are invited to comment on the consultation draft. Submissions should indicate whether the proponent considers that a meeting is necessary or desirable in connection with the development of the confidentiality guidelines and, if so, why. If, on the basis of submissions, the AER concludes that it is necessary or desirable to hold any meetings, they will be convened before the AER publishes draft guidelines as required by clause 8.9(f) of the rules.
The AER prefers that all submissions be publicly available, to facilitate an informed and transparent consultative process. The AER is required by clause 8.9(g) of the rules to make available to all consulted persons, on request, copies of any material submitted. Submissions received will be made available on the AER's website. Therefore submissions must identify any confidential material.
Submissions can be sent electronically to aerinquiry@aer.gov.au. Alternatively, written submissions or submissions on disk, in Word 7.0 compatible format, can be sent to:
Mr Sebastian Roberts General Manager AER—Transition Branch GPO Box 520 MELBOURNE VIC 3001
The closing date for submissions is Thursday, 6 April 2006.
The AER continues to publish weekly market reports that set out the spot price for each 30-minute trading interval in each region of the national electricity market. These reports highlight instances when wholesale market prices are more than three times the weekly average. The analysis compares the demand and price forecasts published by NEMMCO four and 12 hours ahead of dispatch with actual outcomes and provides the most probable reasons for significant variations between actual and forecast prices. These reports are available on the AER website www.aer.gov.au.
Investigations into the events of 31 October 2005 in New South Wales are continuing.
PNG gas project application for authorisation—draft determination
On 16 January 2006 the ACCC released its draft determination proposing to authorise the joint marketing in Australia of gas from the PNG gas project.
The project is a joint venture enterprise involving the production and sale of PNG gas to customers in Australia. The project is expected to begin gas sales in Australia in 2009. For reasons outlined in the draft determination, the ACCC proposed to grant authorisation for 16 years and to extend authorisation to future participants who meet certain criteria.
The ACCC invited interested parties to request a conference in accordance with s. 90A of the Act by 30 January 2006, or to provide written submissions by 6 February 2006 in response to the draft determination.
On 27 January 2006 the Energy Users Association of Australia (EUAA) requested that the ACCC hold a pre-decision conference. The conference was held on 1 March in Brisbane. Interested parties have until 15 March 2006 to make further submissions in response to the matters raised at the conference or any other matters raised in the draft determination.
Roma to Brisbane pipeline: revised access arrangement
The ACCC received the proposed revised access arrangement and access arrangement information for assessment under the gas code on 31 January 2006. The service provider APT Petroleum Pipelines Ltd (APTPPL), a subsidiary of Australian Pipeline Trust, is in the process of supplying supporting information.
The tariffs currently available under the access arrangement are the subject of a Queensland Government derogation which removed reference tariffs from ACCC scrutiny when it approved the access arrangement in 2002.
The ACCC will request submissions on APTPPL’s proposal, and release an issues paper, once sufficient supporting information has been received.
The ACCC has issued its price monitoring and financial report 2004–05 for the seven price-monitored airports—Adelaide, Brisbane, Canberra, Darwin, Melbourne, Perth and Sydney—reporting on the prices, costs and profits for the supply of aeronautical services and aeronautical-related services.
The report shows that airport activity levels at all airports, as measured by passenger volumes, increased in 2004–05, with increases ranging from 6.9 per cent to 17 per cent. This represents the third straight year of increases after a fall in traffic in 2001–02 following the collapse of Ansett, the SARS outbreak and the September 2001 terrorist attacks. Passenger volumes have since recovered with all airports now exceeding 2000–01 levels.
Since 2001–02 total aeronautical revenue generated by the price-monitored airports has increased by 68 per cent to $656.8 million, while at the individual airports increases ranged from 37 per cent to 163 per cent. Prices (as measured by aeronautical revenue per passenger) continued to increase in 2004–05, although to a lesser extent than those price increases experienced over 2000–01 to 2002–03. Since price monitoring was introduced on 1 July 2002 prices have risen by between 13 per cent and 76 per cent and in 2004–05 the increases ranged from 2.6 per cent to 11 per cent.
Aeronautical operating expenses per passenger generally decreased or slightly increased in 2004–05 with changes ranging from a reduction of 8.8 per cent at Sydney to an increase of 3.1 per cent at Darwin, however, Perth increased by 21 per cent. Greater security requirements imposed on airports since 2001 have contributed to increases in aeronautical operating expenses.
Aeronautical operating margins per passenger remained positive for all airports in 2004–05 and ranged from $1.52 to $5.22 per passenger.
In 2004–05 returns on tangible non-current assets ranged from 4.2 per cent to 14 per cent for aeronautical services and from 4.3 per cent to 25 per cent for the total airport. However, these returns for some airports were significantly reduced in several periods by the effect of increases in asset bases due to revaluations.
The ACCC’s price monitoring role is complementary to its quality of service monitoring. The ACCC released its quality of service monitoring report in November 2005.
