The Australian Competition and Consumer Commission has published an information paper on the pricing of Telstra's key wholesale services and dependent retail services.
The paper comprises a 'retail pricing protocol' and is published as part of the Government's operational separation regime.
It outlines the ACCC's views on assessing potentially anti-competitive behaviour in telecommunications markets, and on the concept of 'price equivalence' which is an important element of the operational separation of Telstra.
The retail pricing protocol seeks to promote equivalent pricing across Telstra's wholesale and retail businesses. It provides details on the nature and timing of the calculations that Telstra should make in the course of its pricing decisions, and the information concerning those calculations that it should make public. However, the protocol is not binding on Telstra.
"It is envisaged that as a result of publishing the protocol Telstra will be better able to assess whether particular pricing is likely to be anti-competitive and to be avoided when making pricing decisions", ACCC Chairman, Mr Graeme Samuel, said.
"Also, provided Telstra adopts the protocol's recommended approach, wholesale customers and other interested parties will be able to better understand why particular pricing may or may not be anti-competitive, and the ACCC will be in a better position to readily access information where it is called upon to investigate implemented prices".
The Telecommunications Legislation Amendment (Competition and Consumer Issues) Act 2005 (and subsequent ministerial determinations made under the Telecommunications Act 1997) introduced an 'operational separation' framework for Telstra.
This framework seeks to support (amongst other things) greater equivalence and transparency in Telstra's pricing of certain 'designated' wholesale services, to provide ongoing assurance that Telstra is not favouring its retail business units by implicitly supplying services to itself at prices which are unjustifiably lower than those offered to downstream competitors.
The implementation of the operational separation of Telstra is primarily the Minister's responsibility. The Telecommunications Act 1997 requires Telstra to prepare and give to the Minister for approval a draft operational separation plan which must be directed towards the achievement of the aim and objectives of operational separation. 'Equivalent' pricing is to be addressed through a Price Equivalence Framework specified in the OSP.
Telstra submitted its draft OSP to the Minister on 3 April 2006, which the Minister approved on 23 June 2006.
The ACCC's Retail Pricing Protocol forms one part of the PEF that has been specified in the OSP, but it is of an advisory nature only.
The OSP provides that the PEF will set out the arrangements and approach under which Telstra will conduct imputation tests and consider results from those tests to assess proposals for material price changes for its designated services.
The OSP further provides that the PEF will comprise the following documents:
(a) Telstra's Price Equivalence Framework Strategy (which was issued on 30 June 2006)
(b) Telstra's Retail Pricing Tool
(c) a schedule of notional wholesale prices for Designated Services to be considered by Telstra as an input to the Retail Pricing Tool, and
(d) the ACCC's Retail Pricing Protocol, which will specify the ACCC's views on methodological issues for Telstra's consideration in the Retail Pricing Tool and describe how the imputation test results derived from the Retail Pricing Tool will be interpreted by the ACCC in assessing allegations of vertical price squeezes.
