The Australian Competition and Consumer Commission is vested with powers to arbitrate telecommunications access disputes and to make final binding determinations to resolve disputes. Arbitration hearings are private and the ACCC generally does not publicly comment on disputes except to announce when a dispute has been notified. Details of determinations can be viewed on the determinations register, available on the ACCC website; a list of current access disputes arbitrations can also be viewed.
Access undertakings
Division 5 of Part XIC of the Trade Practices Act 1974 enables access providers to voluntarily lodge written access undertakings with the ACCC that specify the terms and conditions upon which they agree to supply a specified service. The ACCC can accept or reject these undertakings. Undertakings currently before the Commission can be viewed on the ACCC website.
Declared services
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 is able to vary or revoke declarations, but must hold a public inquiry ahead of such changes, except where changes are minor. The declared services register is available on the ACCC website.
Latest developments
Interim telecommunications determination
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:
Telstra unconditioned local loop service
Band 1
Band 2
Band 3
Annual charge
$86.40 ($7.20 per month)
$212.40 ($17.70 per month)
$410.40
($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. The ACCC view is that 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. This is 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 measured in the June quarter, including cable, satellite and wireless.
Under the National Electricity Rules, the Australian Energy Regulator is responsible for regulating revenues associated with the non-contestable elements of transmission services provided by Powerlink Queensland. 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. Powerlink provided an overview of its application at a public forum in Brisbane on 20 April 2006, and interested parties were given the opportunity to comment on the it.
On 3 May the AER commenced its formal consultation process, calling for submissions on Powerlink’s application. Five submissions from interested parties and a response from Powerlink to an interested party’s submission were received.
The AER has engaged PB Associates to assist in reviewing elements of Powerlink’s application, including capital and operating expenditures and service standards. The AER plans to release its draft decision on Powerlink’s application in November 2006, with a final decision planned for March 2007.
All relevant documents can be found on the AER website.
Access arrangements
South West Queensland pipeline—draft decision
On 21 September the ACCC released its draft decision on Epic Energy’s proposed access arrangement revisions for the South West Queensland Pipeline. The SWQP supplies gas from the Cooper Basin in south-west Queensland to Wallumbilla, and so is also known as the Ballera to Wallumbilla Natural Gas Pipeline. It is 756 km long, with a diameter of 406 mm.
The ACCC’s draft decision is to approve the revised access arrangement in its current form because it is satisfied that Epic’s proposed revisions are consistent with the provisions and principles of the national gas code.
These revisions relate to the supply of five transportation services currently available (other than the main forward haul service). Epic proposed minimal changes to its access arrangement and a two-year regulatory period reflecting uncertainty about the likely usage of the pipeline over the next few years. The current review does not cover the tariffs for the main forward haul service as these tariffs were established by the Queensland Government and will not be subject to regulatory review until 2016.
The ACCC will make its final decision after considering submissions in response to the draft decision, which are due by 6 October 2006.
All relevant documents can be found on the AER website.
Guidelines
Electricity distribution regulatory guidelines: statement of approach
On 7 September 2006, the AER issued the Electricity distribution regulatory guidelines: statement of approach, which outlines the scope and timeframes for consultation on the development of guidelines for the regulation of electricity distribution services. This work is part of the AER's preparation for assuming responsibility for electricity distribution regulation, which is expected to occur by 1 January 2008.
Because the legislative framework for energy regulation is still being developed, the AER will consult on these guidelines in the latter part of 2006 and throughout 2007 in the lead-up to the transfer of responsibilities by early 2008.
The specific scope and timetables outlined in the statement of approach are as follows:
Stage 3 Connection and capital contributions Tariff setting Ring-fencing Incentive mechanisms (for opex, capex and service standards)
First half 2007
Third quarter 2007
Early 2008
The AER believes that there is sufficient consensus among stakeholders on the fundamental elements of the likely regulatory regime to begin work on the guidelines. The AER has been particularly guided by the AEMC's recent draft rule determination for electricity transmission, and the Ministerial Council on Energy's latest announcements regarding the 2006 and 2007 legislative packages for energy network regulation.
The AER is mindful of stakeholders' concerns expressed about the possible pre-empting of policy outcomes and will ensure that its guidelines comply with the relevant legislation as it is developed and implemented.
National Electricity Market monitoring and enforcement
The AER hosted the fourteenth meeting of the Energy Intermarket Surveillance Group in Sydney early in September. The EISG comprises bodies responsible for the monitoring and enforcement of competitive electricity markets around the world.
The group provides a forum for the private exchange of market monitoring experiences and techniques, and also develops common ideas with respect to information requirements, market performance indicators and the types of conduct that should be subject to mitigation or sanction.
The two-day meeting was chaired by the AER and was attended by delegates from EISG member organisations from New Zealand, Singapore, South Korea, the Philippines, Canada and the United States of America. The Economic Regulation Authority and the Independent Market Operator of Western Australia were both guests of the AER.
Inquiries were directed to Callide Power Trading (regarding rebids between 14 and 24 July 2006), National Grid Australia (about a rebid associated with Basslink on 18 August 2006), and Tarong Energy (about a series of rebids in June and August 2006).
The AER continues to publish weekly market analyses on its website. These reports set out the spot price for each 30–minute trading interval in each region of the National Electricity Market and 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 dispatch with actual outcomes, and publish the most probable reasons for significant variations between actual and forecast prices.
During September, the AER Markets Branch presented to delegates from Western Australia, Canada, Singapore, Korea and Saudi Arabia.
