The ACCC is vested with powers to arbitrate telecommunications access disputes and make a final binding determination to resolve a dispute. Arbitration hearings are private and the ACCC generally does not make any public comment on disputes except to announce when a dispute has been notified.
Notification of three telecommunications access disputes
Request Broadband Pty Limited and PowerTel Limited have notified the ACCC of three separate access disputes with Telstra Corporation Limited.
The first access dispute relates to various price terms of supply of the line sharing service (LSS) from Telstra to Request.
The second access dispute relates to various price terms of supply of the unconditioned local loop service (ULLS) from Telstra to Request.
The third access dispute relates to various price terms of supply of the ULLS from Telstra to PowerTel.
The ACCC has commenced the arbitration processes for these access disputes.
Access udertakings
Division 5 of Part XIC of the Trade Practices Act enables access providers to voluntarily lodge written access undertakings with the ACCC specifying the terms and conditions upon which they agree to supply a specified service. The ACCC can accept or reject the undertaking. View the list of undertakings currently before the ACCC here.
ACCC rejects Hutchison’s undertakings for mobile terminating access service (MTAS)
The ACCC decided to reject the access undertakings submitted by Hutchison Telecommunications (Australia) Limited and Hutchison 3G Australia Pty Ltd for the supply of the MTAS on its second generation code division multiple access (CDMA) and third generation global system for mobile communications (GSM) network.
The ACCC has rejected the undertakings because some of the terms and conditions are not reasonable.
In its submission supporting the undertaking Hutchison indicated 12 cpm was an ‘appropriate price’ for the supply of MTAS. A price of 12 cpm is consistent with the indicative price outlined in the ACCC’s pricing determination for the period 1 January 2007 to 30 June 2007.
This undertaking was rejected because of certain non-price conditions. A condition sought to override the contractual terms of existing commercial agreements. The ACCC has no jurisdiction over these agreements unless the terms fall within the ambit of the Trade Practices Act.
Draft decision to reject Telstra’s $30 average ULLS charge
The ACCC issued its draft decision to reject Telstra’s ULLS monthly charges undertakings, which proposed a monthly $30 average charge. Telstra has proposed for the first time averaging the significantly different cost estimates for providing the ULLS across all geographic regions into a single monthly charge of $30.
The ACCC believes that Telstra’s proposed average price is unlikely to promote competition on its merits and likely to heavily distort the use of and investment in telecommunications infrastructure.
Further, the ACCC continues to have concerns with Telstra’s proposed network cost estimates for the service, which rely on its PIEII cost model. Telstra’s cost model has the likely tendency to overstate costs in rural areas and thereby support a much higher average charge for the service than is likely to be efficient.
On the material available to the ACCC to date, therefore, Telstra has failed to establish that its proposed charges are based on efficient costs.
Part XIC of the Trade Practices Act enables the ACCC to ‘declare’ telecommunications services. Upon declaration, standard access obligations apply.
The access provider is obliged to supply the service to an access seeker upon request.
The ACCC has the ability to vary or revoke declarations but, with the exception of minor changes, the ACCC must hold a public inquiry ahead of such changes.
Position paper on future regulation of fixed network services
The ACCC issued a telecommunications position paper concerning the future regulation of key services that are delivered over fixed networks.
The principal immediate focus is an assessment of whether to continue the declarations of the ULLS and the public switched telephone network (PSTN) originating and terminating access (PSTN OTA) services, having regard to emerging market, technological and network developments.
The ACCC’s draft decision continues the regulation of the ULLS and PSTN OTA services on a national basis for a period of three years.
The ACCC recognises the emergence of various local access networks in some areas, mostly in CBDs, which rely on a range of alternative technologies such as fixed wireless, optical fibre and satellite services, and that this trend will gain momentum over time. However, the ACCC is not satisfied that there is effective competition in particular areas, even where some form of competitor infrastructure exists.
The ACCC has also made a draft decision to revoke the declaration of the conditioned local loop service, on the grounds that this provides little or no competitive benefits.
Annual assessment of telecommunications competition
The minister tabled in parliament the ACCC’s two annual reports—Telecommunications competitive safeguards and Changes in prices paid for telecommunications services in Australia 2004–05.
The reports show that the telecommunications industry continued to progress toward a more competitive environment in 2004–05.
The overall average price paid by consumers for telecommunications services fell in real terms by 6.6 per cent in the 2004–05 financial year.
Telstra accounting separation report for March quarter 2006
The ACCC issued its eleventh imputation testing and non-price terms and conditions report under the enhanced accounting separation regime for Telstra. The report presents data for the quarter ending 31 March 2006.
The report presents key performance indicators that compare Telstra’s customer service performance in meeting certain non-price terms and conditions for its wholesale and retail customers. Key performance indicators for fixed-line telephony and ADSL services are reported. The report does not reveal any systematic discrimination by Telstra against its wholesale customers.
The report also presents an imputation analysis that compares Telstra’s retail prices to the prices of three ‘core’ telecommunications services—the local carriage service, the PSTN originating and terminating access service and the ULLS. The analysis is designed to give an indication as to whether there are likely to be sufficient margins between Telstra’s retail prices and the prices it charges other service providers to use the core services, so as to allow efficient firms to compete at retail level.
The ACCC issued the sixth current cost accounting report relating to Telstra.
The report contains current cost financial information for the three ‘core’ telecommunications access services—the local carriage service, the PSTN originating and terminating access service and the ULLS.
The report provides present-day valuations of Telstra’s assets that are compared with the historical or original costs of these assets. The report also includes profit and loss and capital employed services that are higher than the historical asset valuations.
The report indicates that on a current cost basis, the aggregate values of assets for the core access services are higher than the historical asset valuations.
Under the National Electricity Rules, the AER is responsible for regulating the revenues associated with the non-contestable elements of transmission services provided by Powerlink Queensland (Powerlink). The AER will set Powerlink’s revenue cap for a five-year period from 1 July 2007 to 30 June 2012.
The AER received Powerlink’s revenue cap application on 3 April 2006. A copy of the application and supporting information can be found on the AER’s website.
On 3 May the AER began its formal consultation process, calling for submissions on Powerlink’s application by 13 June 2006. The AER received five submissions on the application. The AER has engaged PB Associates to assist in reviewing elements of Powerlink’s application, including capital and operating expenditure and service standards.
The AER plans to release its draft decision on Powerlink’s application in September 2006 with a final decision planned for December 2006.
Indicators of the market impact of transmission congestion—final decision and report for 2003–04
On 21 June 2006 the AER released its final decision regarding indicators of the market impact of transmission congestion and its first report for 2003–04 of the same title. The AER’s decision is to publish indicators on the market impact of transmission congestion.
This decision results from significant work that was initially commenced by the ACCC and then progressed by the AER. In undertaking this work the AER has been assisted with input from many stakeholders. The primary objective of this decision is to publish information that will improve understanding about transmission congestion.
Data on each of the indicators relating to 2003–04 has been released in conjunction with this decision. Results for 2004–05 and 2005–06 will be released in the third quarter of 2006.
The AER cautions against drawing conclusions from a single year’s data. The AER considers that as more data is published and stakeholders can provide feedback, reliable conclusions may be reached.
The decision and first report documents are available on the AER website. If you have any queries or require further information please contact the AER on AERInquiry@aer.gov.au.
The AER continues to publish weekly market analyses that set out the spot price for each 30-minute trading interval in each region of the National Electricity Market. These reports highlight wholesale market prices more than three times the weekly average. They compare the demand and price forecasts published by NEMMCO four and twelve hours ahead of despatch with actual outcomes, and publish the most probable reasons for significant variations between actual and forecast prices. Those reports are available on the AER website.
Also in June the AER issued draft guidelines and a draft report relating to the confidentiality of information obtained, used or disclosed for the purposes of resolving a dispute under the dispute resolution process established by Chapter 8 of the National Electricity Rules.
Application by GasNet Australia under s. 8.21 of the Gas Code
On 23 December 2005 GasNet lodged an application under s. 8.21 of the Gas Code seeking the ACCC’s agreement that forecast capital expenditure (new facilities investment) in constructing the Corio Loop will meet the requirements of s. 8.16(a) of the Gas Code for roll-in to GasNet’s capital base. The effect of such an agreement would be to bind the ACCC’s decision when it considers revisions to GasNet’s access arrangement in 2007. This is the first application of this nature made to the ACCC.
GasNet is the owner-operator of the Victorian principle transmission system (PTS) which is the primary transmission system for the delivery of gas throughout Victoria. In its annual planning review VENCorp, the independent system operator of the PTS, identified a major system capacity constraint that would face the PTS in winter 2008. VENCorp recommended that GasNet undertake a major system augmentation to ensure that the PTS has sufficient useable system linepack to cover supply–demand imbalances at this time.
VENCorp identified a number of ways to achieve the required augmentation and, on the basis of cost–benefit analysis, has recommended the extension of the southwest pipeline from Lara to Brooklyn (Corio Loop). The proposed project involves construction of a 57 km, 500 mm diameter pipeline, running from the Brooklyn compressor station for 12 km using an existing easement, and then along a greenfields route to meet the southwest pipeline in Lara. The total capital cost of the project is expected to be $70.7 million.
Interested parties were invited to make submissions and provide supporting information on any issues relevant to the application by GasNet by Friday 10 February 2006. The ACCC released a draft decision on 5 April 2006 inviting submissions.
On 6 June 2006 the ACCC issued a final decision approving an amount of $61.7 million and the provision for an additional allowance for financing costs, under s. 8.16(a) of the Gas Code.
Gas ring fencing compliance report programme 2004–05
The ACCC has finalised its assessment of the ring fencing compliance reports submitted by service providers of the gas transmission pipelines, within the context of service providers’ reporting obligations under section 4.13 of the code.
As in previous years, the ACCC found that the level of detail and usefulness of the information provided was variable. In summary, reports for four pipelines fully complied with the reporting requirements. For the remainder of the reports further information will be required in future so that the reporting obligations are met in full. The ACCC has written to all service providers individually identifying areas where better future reporting appears warranted.
In addition one report from a service provider was not provided and remains outstanding. The ACCC has requested that this report be provided promptly.
Authorisation of Western Australian Wholesale Electricity Market Rules
On 26 June 2006 the ACCC received an application from the Independent Market Operator (IMO) for authorisation under Part VII of the Trade Practices Act in relation to the Western Australian Wholesale Electricity Market Rules (the market rules).
The Trade Practices Act provides that the ACCC may authorise conduct or arrangements that may breach the Act when it is satisfied that the public benefits from the conduct or arrangements outweigh the public detriment constituted by any lessening of competition.
The IMO seeks authorisation of conduct required under the market rules for participation in the South West Interconnected System (SWIS). If granted, the authorisation will apply to the IMO, the Electricity Networks Corporation, all persons registered (or subsequently to register) with the IMO as a rule participant, and any person or body on which the market rules or the Wholesale Electricity Market Regulations confers functions, powers or responsibilities.
Authorisation is sought for the market rules as a whole, for a period of no less than 15 years.
The ACCC invites submissions from interested parties relating to the public benefits and public detriments likely to arise as a result of authorisation of the market rules.
