ACCC issues draft decision to reject Telstra's PSTN and LCS undertakings
The Australian Competition and Consumer Commission today issued its draft decision to reject Telstra's Public Switched Telephone Network Originating and Terminating Access Services and Local Carriage Service undertakings.
The PSTN OTA services are used as inputs by competitors primarily to supply long distance calls as well as fixed-to-mobile and mobile-to-fixed calls. They can also be used by competitors to interconnect with Telstra's fixed network.
The LCS is used by competitors to supply local calls to end users. It allows competitive entrants to resell local calls without deploying substantial alternative infrastructure.
Telstra's proposed undertaking prices would involve a substantial reduction in the headline LCS prices and a substantial increase in the headline PSTN OTA prices.
"The ACCC is not satisfied that Telstra's proposed prices, which have been presented to the ACCC as a package, are reasonable", ACCC Chairman, Mr Graeme Samuel, said today.
"Telstra's proposed pricing approach for the PSTN OTA and the LCS would represent a fundamental rebalancing of the competitive dynamics in the fixed line services markets, with a doubling of the headline rate for PSTN services", he said.
"Telstra's proposed pricing would significantly disadvantage facilities based access seekers, while providing an advantage to resellers of Telstra's end-to-end local call services".
Further, the ACCC continues to have concerns as to whether Telstra's proposed network cost estimates which rely on its PIE II cost model are reasonable. On the material available to the ACCC to date, the ACCC is not satisfied that Telstra's proposed charges are based on reasonable estimates of efficient costs.
Copies of the ACCC's draft report and other documents relevant to the access undertakings (including the undertakings, Telstra's supporting submissions and other material) are available on the ACCC website (see link below).
The ACCC seeks submissions by interested parties on its draft view by no later than 29 September 2006.
On 22 March 2006 Telstra lodged access undertakings specifying price-related terms and conditions upon which it undertakes to meet its standard access obligations to supply the PSTN OTA and the LCS.
Telstra's proposed 'headline' charges are as follows:
Existing
2006-07
2007-08
LCS (per call)
$0.1361
$0.0928
$0.0928
PSTN TA and PSTN non-preselect OA (per minute)
$0.01
$0.0218
$0.0228
PSTN Preselect OA- per minute charge
- per customer per month
$0.01
$0.0119
$1.44
$0.0124
$1.48
Telstra's proposed Undertaking prices involve a substantial reduction in the headline LCS prices and a substantial increase in the headline PSTN OTA prices.
The ACCC declared the PSTN OTA services in July 1997.
The ACCC declared the LCS in August 1999. On 17 July 2002, the ACCC granted an order providing Telstra with an exemption under section 152AT of the Act with respect to the supply of LCS in the CBD areas of Sydney, Melbourne, Brisbane, Adelaide and Perth to take effect on 17 July 2003.
