ACCC welcomes Australian Competition Tribunal decision on Optus's supply of Mobile Terminating Access Service

The Australian Competition and Consumer Commission today welcomed a decision by the Australian Competition Tribunal to reject Optus's proposed undertaking for the supply of its Domestic GSM Terminating Access Service.

Optus had proposed that the price for the Mobile Terminating Access Service should trend towards a proposed target price of 17 cents per minute in 2007, using a three-year adjustment path. The ACCC had previously released a pricing determination that provided for prices to fall to 12 cents per minute by 2007.

Optus had sought a decision from the tribunal to overturn an ACCC decision that the terms and conditions on which Optus proposed to supply the service were unreasonable and that the access undertaking should be rejected.

Today's decision by the tribunal affirmed the ACCC's decision to reject the access undertaking. The ACCC expects that the tribunal's reasons for its decision will be publicly available this Friday, subject to confidentiality issues being resolved.

The price of access to the terminating access service for mobiles will be subject to agreement between Optus and its wholesale customers. Where commercial agreement is unable to be reached, it will be subject to arbitral determination by the ACCC. The ACCC's pricing determination is used as a guide in any such arbitrations.

The ACCC has engaged consultants to develop a costing model to assist in its consideration of prices for supplying the terminating access service after 30 June 2007, when its current pricing determination expires.

Background

On 30 June 2004, the declaration for the mobile terminating access was extended to include termination of voice calls on 2.5G and 3G mobile networks. On the same date, the ACCC also issued a new pricing principles. In that determination the ACCC set out that the price of the MTAS should followed an adjustment path towards the conservative cost estimate of 12 cents per minute over the 30 month period from 1 July 2004 to 1 January 2007.

Currently the ACCC has engaged WIK Consult to develop a 'bottom-up' cost model, to inform it of cost estimates of the mobile termination service from 30 June 2007.

Optus lodged an ordinary access undertaking with respect its supply of its Domestic GSM Terminating Access Service with the ACCC on 23 December 2004. The undertaking related to the supply of mobile termination on Optus's 2G GSM network, which is a subset of the broader MTAS service declared by the ACCC in June 2004.

The Optus undertaking proposed that the price for the DGTAS should trend towards Optus's estimate of 17 cents per minute in 2007, using a three-year adjustment path.

On 3 February 2006, the ACCC issued its final decision to reject the undertaking.

On 23 February 2006, Optus applied to the Australian Competition Tribunal for review of the ACCC's final decision to reject its undertaking.