The ACCC is vested with powers to arbitrate telecommunications access disputes and make final binding determinations to resolve disputes. Arbitration hearings are private and the ACCC generally does not comment publicly on disputes except to announce when a dispute has been notified.
Division 5 of Part XIC of the Trade Practices Act enables access providers to voluntarily lodge written access undertakings with the ACCC specifying the terms and conditions upon which they agree to supply a specified service. The ACCC can accept or reject the undertaking.
View the list of undertakings currently before the ACCC here.
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 has the ability to vary or revoke declarations, but with the exception of minor changes, must hold a public inquiry ahead of such changes.
During November, the ACCC announced that the following new arbitrations had been notified:
Optus Networks Pty Ltd notified the ACCC of an access dispute with Telstra Corporation Limited. The access dispute relates to Telstra providing the Unconditioned Local Loop Service (ULLS) to Optus in multi-dwelling units served with a main distribution frame. This dispute concerns the ability of end-users to access services through ULLS while living in an apartment building or another form of multi-dwelling unit or building served with a main distribution frame.
NEC Australia Pty Ltd notified the ACCC of an access dispute with Telstra Corporation Limited. The access dispute relates to the monthly price for which Telstra supplies the ULLS to NEC.
The ACCC has received notification of three access disputes concerning the charges associated with supply of the Line Sharing Service by Telstra. The disputes have been notified by Adam Internet Pty Limited, Agile Pty Limited and Amcom Pty Limited respectively. The LSS involves the transmission of voice telephony services and broadband internet services over the same copper line spectrum. The access provider uses the low frequency part of the spectrum to provide voice telephony services to end-users while access seekers may simultaneously use the high frequency part of the spectrum to supply broadband internet services to end-users.
The ACCC has commenced the arbitration process for these access disputes.
Australian Competition Tribunal's decision on Optus's supply of Mobile Terminating Access Service
On 22 November 2006 the Australian Competition Tribunal handed down its decision to reject a proposed undertaking by Optus 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.
The decision by the Tribunal affirmed the ACCC's decision to reject the access undertaking.
Access undertakings for fixed interconnection and local call resale services
On 29 November 2006 the ACCC made two decisions on related matters regarding fixed interconnection, local call resale and wholesale line rental.
The ACCC issued its final decision to reject Telstra's undertakings for fixed interconnection (PSTN) and local call resale (LCS) services and has released indicative prices for fixed interconnection, local call resale and wholesale line rental services.
Telstra's undertaking for fixed interconnection and local call resale
The ACCC decided that Telstra's proposed undertaking prices would involve a substantial reduction in the headline local call resale prices and a substantial increase in the headline fixed interconnection prices.
The ACCC is not satisfied that Telstra's proposed prices, which were presented to the ACCC as a package, are reasonable. Telstra's proposed pricing approach for the fixed interconnection and the local call resale services would represent a fundamental shift in the competitive dynamics in the fixed line services markets. Telstra's proposed pricing would significantly disadvantage facilities-based access seekers.
Indicative prices for fixed interconnection, local call resale and wholesale line rental services
The ACCC also released its final determination on pricing principles for fixed interconnection and local call resale services, as well as for the wholesale line rental service. Associated with the pricing principles, the ACCC also issued indicative prices for all three services. The principles and indicative prices will operate until 31 December 2007.
With the rejection of Telstra's undertakings, the price of access to the fixed interconnection, local call resale and wholesale line rental services will continue to be subject to agreement between Telstra 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 principles and indicative prices for the three services are used as a guide in any such arbitration.
Consistent with the draft issued by the ACCC on 28 July 2006, the ACCC has determined a cost-based (TSLRIC+) approach to the pricing of the fixed interconnection and maintained a retail-minus, retail-cost approach for the local call resale and wholesale line rental.
However, the ACCC considers that any indicative prices relating to the pricing of LCS and WLR for 2006–07 will be transitional in nature. They will stay in place while the ACCC undertakes more detailed analysis on assessing efficient LCS and WLR costs and prices using appropriate costing models.
View further information about these decisions here.
Discussion paper on analogue pay-TV service declaration
On 20 November 2006 the ACCC issued a discussion paper on the declaration for the analogue pay-television service. The paper marks the start of a public inquiry into whether the declaration should be continued, varied or revoked.
The ACCC deemed the analogue pay-TV service a declared service on 1 September 1999.
The ACCC is obliged to review the declaration before it expires in July 2007. However, given that the undertakings provided by Foxtel and Telstra under the declaration are due to expire in March 2007, the ACCC considers it timely to begin the public inquiry now.
The ACCC proposes the preliminary view that continued declaration of the analogue pay-TV service is unlikely to promote the Long Term Interests of End-Users, and that therefore it should not be continued.
On 30 November 2006 the ACCC issued its seventh current cost accounting report relating to Telstra.
The report contains current cost financial information for 'core' telecommunications access services. It provides information about current cost accounting that the ACCC is required to make public under the direction issued by the Minister for Communications, Information Technology and the Arts in June 2003.
The report provides present-day valuations of Telstra's assets compared with the historical or original costs of these assets. The report also includes profit-and-loss and capital-employed statements on a current cost basis. The report indicates that on a current cost basis the aggregate values of assets for the core access services are higher than historical asset valuations.
This information does not represent the forward-looking cost of assets nor is it calculated using a fully or substantially optimised network configuration.
The ACCC delivered two speeches on telecommunications regulation in November. On 21 November 2006 ACCC Commissioner Mr Ed Willett addressed the Broadbanding Regional Australia 2006Conference in Sydney. Mr Willett said the ACCC will continue to regulate telecommunications only where necessary, in a balanced and considered way.
Mr Willett said that the ACCC has long recognised that the essence of telecommunications competition in this country is to encourage competitors to build their own facilities rather than simply acquiring wholesale access from incumbents who have already made the investment and then reselling it to consumers.
‘Australia was not badly placed when compared to other OECD countries in terms of broadband technologies,’ Mr Willett said.
At the Australian Financial Review Broadband Australia 2006 Conference in Sydney on 30 November 2006, ACCC Chairman Mr Graeme Samuel issued a series of challenges to Telstra.
Mr Samuel said Telstra should ‘throw the switch’ on ADSL2+ in exchanges capable of being enabled to ADSL2+, and should offer high-speed broadband to the vast majority of Australians, as it could, he said.
Mr Samuel also challenged Telstra to expose its fibre-to-the-node proposal to public examination—'to the extent that it was developed’—prior to Telstra withdrawing from discussions.
On 1 November 2006 the ACCC made a final decision to approve revisions lodged by Epic Energy to its access arrangement for the South West Queensland pipeline. The scope of the review was limited as the access arrangement is subject to a Queensland Government derogation that precludes the ACCC from reviewing the reference tariff and reference tariff policy for the full forward haul service (the only currently available reference service) until 30 June 2016. The revised access arrangement comes into effect on 1 January 2007.
Queensland Gas pipeline—trigger mechanism review
The access arrangement for the Queensland Gas Pipeline (QGP, also known as the Wallumbilla to Gladstone via Rockhampton Pipeline) commenced on 19 November 2001 for 15 years. This period was set by the Queensland Government.
The gas code provides that, if an access arrangement period is for longer than five years, the regulator must consider whether any mechanisms should be included that would trigger an early review of the access arrangement. The gas code also requires the regulator to investigate at least once every five years whether a trigger event has occurred.
The access arrangement for the QGP includes such a trigger mechanism. Specifically, the access arrangement for the QGP can be reviewed if a new pipeline connects with the QGP or if the QGP transports a significant new source of gas supply. For a review to be triggered, the event must lead to significant change in the types of services sought by the market or a change in the direction of the flow of gas.
On 17 November 2006 the ACCC wrote to the service provider and other interested parties seeking submissions on whether an event had occurred that would trigger a review of the QGP access arrangement. Submissions were due by 1 December 2006.
Dawson Valley pipeline
On 1 November 2006 the ACCC granted a request by Anglo Coal and Mitsui to extend the time allowed for them to lodge an access arrangement for the Dawson Valley pipeline (DVP) until 5 February 2007.
On 8 November 2006 the ACCC granted a request by Anglo Coal and Mitsui to extend the time allowed for them to comply with certain ring-fencing obligations for the DVP until 9 March 2007.
On 14 November 2006 Anglo Coal and Mitsui requested that the ACCC waive certain ring-fencing obligations for the DVP. The ACCC has requested that submissions on the application be lodged by 8 December 2006. After considering submissions, it will release its draft decision by 22 December 2006. After considering further submissions, it will release its final decision.
The Australian Energy Market Commission (AEMC) has published its final determination on the economic regulation of transmission services from its review of Chapter 6 of the National Electricity Rules. Chapter 6A commenced operation on 16 November 2006 and establishes a regulatory framework based largely on the Australian Energy Regulator's Statement of Regulatory Principles.
The AEMC review of Chapter 6 will be completed with the release of its final Rule Determination for Transmission Pricing, which will take effect on 1 January 2007.
Electricity Reform Agenda
The Australian Energy Regulator has made a submission to the Energy Reform Implementation Group following the publication of its issues paper on competitive market structures, a national transmission system and effective financial markets in energy. ERIG is to report to the Council of Australian Governments by the end of the year on new initiatives in energy reform.
On 2 November 2006 the ACCC issued its 2005–06 container stevedoring monitoring report covering prices, costs and profitability of container terminal operators at the ports of Adelaide, Brisbane, Burnie, Fremantle, Melbourne and Sydney.
The report shows that stevedoring unit revenues and costs both increased, while productivity fell. This contrasts with a pattern of declining real unit revenue and costs and increasing productivity that occurred in the late 1990s following reforms to the Australian waterfront.
Higher unit costs mainly reflected higher fuel costs and capital works. Information provided by the stevedores indicates that the industry is continuing to invest in new assets, which is expected to result in additional future terminal capacity.
Higher revenues were derived from stevedoring and non-stevedoring activities. The core business of stevedoring—the loading and unloading of containers from vessels—attracted higher charges. Higher revenues were also derived from ancillary services such as container storage.
Profitability as measured by an average rate of return on assets fell slightly in 2005–06 but remains relatively high. This is in contrast to much lower levels of profitability reported by the stevedoring industry during the period prior to the waterfront reforms.
A number of port managers are currently implementing plans to expand container terminal capacity. These expansions have the potential to affect substantially the degree of competition associated with the provision of stevedoring services.
The report identifies several challenges facing port managers, including land-side efficiency, and notes that a more proactive approach to the management of certain land-side logistics arrangements may be required.
