The ACCC has published an interim determination, along with a statement of reasons, in a telecommunications arbitration about the supply of the unconditioned local loop service (ULLLS) from Telstra Corporation Ltd to Chime Communications Pty Ltd.
This publication will help to inform debate on the ULLS and encourage the application of reasonable ULLS prices across the market. The August 2006 interim determination provides the following annual charges for the supply of the ULLS to apply between Chime and Telstra (unless they agree otherwise) until 10 April 2007, or until a final determination comes into effect or the interim determination is revoked:
Band 1 Band 2 Band 3 $86.40 $212.40 $410.40 ($7.20 per month) ($17.70 per month) ($34.20 per month)
More than 80 per cent of the reduction from 2005–06 band 2 prices ($22 per month) to the prices specified in the interim determination ($17.70 per month) is due to the use of 2006–07 cost and demand data supplied by Telstra in support of its ULLS access undertakings submitted in December 2005.
The ACCC will now move to a final determination, taking into account a broader and more complex range of issues than is required for an interim determination. Given this, it is unlikely that a final determination will be available before the end of 2006 at the earliest. However, the ACCC can backdate a final determination.
Draft decision to reject Foxtel’s special access undertaking for digital set top unit service
On 1 September 2006 the ACCC announced a draft decision to reject the special access undertaking submitted by Foxtel in relation to its digital set top unit service. These units receive, decrypt and display pay-TV content (including interactive television content) at the customer’s premises.
The service has a number of components:
access to Foxtel’s digital set top units
conditional access services that control what channels a subscriber can view (through encryption of the pay-TV signal)
Foxtel’s electronic program guide
the modem within the unit that supports interactive TV.
Foxtel’s undertaking would allow content providers to use its digital pay-TV platform to sell their own channels direct to Foxtel subscribers.The ACCC’s examination of the market suggested that other pay-TV firms can buy these individual services commercially. The ACCC would not place great weight on the value of regulated access to these individual services on a stand-alone basis. The ACCC considers that other factors, such as access to premium content, are more critical impediments to effective competition between pay-TV firms.
However, a special access undertaking is a mechanism under the Act offering access to services on agreed terms and conditions; in the view of the ACCC, it cannot legally be used as a backdoor way to obtain an exemption from possible access regulation. The key difficulty is that the undertaking also prevents competing pay-TV firms from using the Trade Practices Act to access individual component services making up the digital set top unit service from Foxtel on a stand alone-basis.
Therefore, the ACCC’s draft decision is that it is not able in law to accept the undertaking.
Notification of telecommunications access dispute
Telstra Corporation Limited has notified the ACCC of an access dispute with Optus Networks Pty Limited.
The dispute relates to the price paid by Optus for access to telecommunications towers owned or operated by Telstra and the sites of such towers, accessed by Optus under ss. 33 and 34 of Schedule 1 of the Telecommunications Act 1997.
ACCC issues draft decision to reject Telstra’s PSTN and LCS undertakings
On 11 September the ACCC issued its draft decision to reject Telstra’s public switched telephone network originating and terminating access services (PSTN OTA) and local carriage service undertakings (LCS).
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. 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. 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.
Furthermore, the ACCC is still not satisfied, given available information, that Telstra’s proposed network charges, which rely on its PIE II cost model, are based on reasonable estimates of efficient costs.
Take-up for broadband services continues to increase, according to the ACCC Snapshot of Broadband Deployment issued on 14 September 2006.
According to the report, in the quarter ending 30 June 2006, 3 518 100 broadband services were connected across Australia. This represents an increase of over one million customers, or 67 per cent, over the preceding 12-month period, and continues a trend observed since June 2005.
However, as expected, the percentage growth of broadband take up has declined given the increase of the total subscriber base in absolute terms.
Total quarterly growth in broadband was about 11 per cent for the June quarter, down from the March 2006 growth of about 14 per cent.
While DSL-based services remain the most popular type of broadband adopted by Australians, increased take-up was observed across all other forms of broadband (including cable, satellite and wireless) measured in the June quarter.
