The ACCC is vested with powers to arbitrate telecommunications access disputes and make a final binding determination to resolve a dispute. Arbitration hearings are private and the ACCC generally does not make any public comment on disputes except to announce when a dispute has been notified. Details of determinations made can be accessed on the public register, available here.
Division 5 of Part XIC of the Trade Practices Act 1974 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.
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.
On 19 January 2007 the ACCC issued the reasons supporting interim determinations made on 21 December 2006 for disputes regarding annual charges for the supply of the Line Sharing Service (LSS). The interim determinations were made regarding two LSS arbitrations involving Telstra Corporation Ltd and Chime Communications Pty Ltd, and another between Telstra Corporation Ltd and Request Broadband Pty Ltd.
The interim determinations provide that the LSS annual charge payable by a party to Telstra for the LSS is $38.40 per LSS per annum ($3.20 per LSS per month). The charge will apply between the parties for no more than one year. However, the ACCC intends to progress the arbitration of these access disputes towards a final determination as a matter of priority and is looking to make final determinations by no later than 31 March 2007.
The charge specified in the interim determinations will replace Telstra's LSS annual charge of $108 ($9 per month), which Telstra has continued to apply notwithstanding that the ACCC (2005) and the Australian Competition Tribunal (June 2006) have both ruled that a charge of this amount is not reasonable.
In making the interim determinations, the ACCC has applied its longstanding LSS pricing principles (2002) and also previous rulings made by the ACCC (2005) and the Australian Competition Tribunal (June 2006) concerning a reasonable approach to setting LSS annual charges.
Australian Competition Tribunal rejects Vodafone's proposed undertaking
On 11 January 2007 the Australian Competition Tribunal handed down its decision to reject Vodafone's proposed undertaking for the supply of the Mobile Terminating Access Service (MTAS) on its 2G GSM network.
Vodafone had proposed the price for the service should trend towards a proposed target price of 16.15 cents per minute in 2007, while the ACCC has maintained that 12 cents per minute is the appropriate price for the period up to 30 June 2007.
The decision by the Tribunal affirmed the ACCC's earlier decision to reject Vodafone's access undertaking. The Tribunal was not satisfied that:
Vodafone's costs were efficiently incurred
the costs produced in the model prepared for Vodafone by its consultants generated an accurate cost of providing the MTAS
Vodafone's proposed prices would do no more than cover Vodafone's costs of supplying the service.
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.
View further information about this decision here.
Foxtel lodge’s revised special access undertaking for digital set top unit service
On 6 December 2006 Foxtel lodged a revised special access undertaking relating to the pay-TV Digital Set Top Unit service. This undertaking comes after Foxtel, on 1 December 2006, withdrew the special access undertaking lodged with the ACCC in October 2005.
The revised special access undertaking incorporates changes that Foxtel states are intended to address the concerns of the ACCC expressed in its draft decision, to reject the original special access undertaking.
The ACCC’s draft decision, issued on 1 September 2006, rejected the original special access undertaking on the grounds that it could not be satisfied that the terms and conditions of the undertaking were consistent with the standard access obligations in the Trade Practices Act.
ACCC releases discussion paper on Foxtel’s revised undertaking
On 15 December 2006 the ACCC released a discussion paper on the new special access undertaking lodged by Foxtel on the pay-TV digital set top unit service. Foxtel has made various changes to the price and non-price terms and conditions of access to its digital set top units to address the ACCC's concerns on the original undertaking.
One of the most important differences between the undertakings is that the new undertaking is now limited to setting out the terms and conditions of access to Foxtel's digital set top units. It no longer attempts to prevent regulated access to other related services, such as conditional access and service information services.
As there has been extensive consideration of the matter to date, the ACCC may proceed direct to a final decision without a further draft decision, depending on the nature of any submissions received from the public consultative process. As noted previously, on 1 September 2006 the ACCC issued a draft view to reject the original special access undertaking on the grounds that it could not be satisfied that the terms and conditions of the undertaking were consistent with the standard access obligations in the Trade Practices Act.
View the discussion paper as well as the revised undertaking here.
ACCC issues information paper on Broadband speed claims
On 31 January 2007 the ACCC issued an Information Paper developed to assist internet service providers (ISPs) comply with the Trade Practices Act when advertising broadband internet.
ISPs must not make representations that are misleading or deceptive, or are likely to mislead or deceive.
Although directed at all broadband providers, the paper focuses primarily on ADSL2+ broadband services. ADSL2+ is a relatively new technology which is becoming available to more and more consumers.
The paper draws attention to the industry practice of using hypothetical speeds as the basis of speed claims when these speeds are unlikely to be achieved in the real world. The ACCC considers that ISPs should have a reasonable basis, such as network tests, for any representations they make as to what speeds are available to future users of the network.
On 21 December 2007 the ACCC issued its thirteenth imputation testing and non-price terms and conditions report under the enhanced accounting separation regime for Telstra. The report presents data for the quarter ending 30 September 2006.
The report presents key performance indicators that compare Telstra's customer service performance in meeting certain non-price terms and conditions for its wholesale and retail customers. Key performance indicators for fixed-line telephony and ADSL services are reported. The report does not reveal any systematic discrimination by Telstra against its wholesale customers.
The report also presents an imputation analysis that compares Telstra's retail prices to the prices of three ‘core’ telecommunications access services. The analysis is designed to give an indication whether there are likely to be sufficient margins between Telstra's retail prices and the prices it charges other service providers to use the core services (plus related costs) to allow efficient firms to compete at the retail level. The analysis is not intended to detect all forms of potentially anti-competitive conduct.
Discussion paper issued on licences for new digital television services
On 15 December 2006 the ACCC issued a discussion paper seeking stakeholders' views on the access regime that will apply to 'Channel B', one of the two licences for new digital television services that will be made available by the government next year.
Possible uses for Channel B include mobile television and new services to in-home digital television sets.
Firms must have lodged an access undertaking that has been accepted by the ACCC before being eligible to participate in the allocation process for Channel B. The allocation process itself will be managed by the Australian Communications and Media Authority.
Interested stakeholders are requested to make submissions by 5 February 2007.
Powerlink Queensland transmission network revenue cap
On 20 December 2006 the AER released its draft decision on the revenue cap to apply to Powerlink from 1 July 2007 to 30 June 2012. The draft decision provides maximum allowed revenues for Powerlink ranging from $536 million in 2007–08 to $736 million in 2011–12. On average this allowed revenue is around 3 per cent less than Powerlink’s requested revenue of $540 million in 2007–08 to $751 million in 2011–12. The revenue cap is based on a post-tax nominal return on equity of 11.68 per cent and an opening regulated asset base of around $3.8 billion.
The draft decision provides for a significant increase in investment in Powerlink’s transmission network. The AER has approved an investment allowance of over $2 billion during the regulatory period to allow Powerlink to respond to the rapid growth in forecast demand for electricity by both residential and industrial Queensland customers and to replace ageing network assets. The AER also determined a total operating and maintenance allowance of over $700 million for the regulatory period, increasing from $141 million in 2007–08 to $143 million in 2011–12. The draft decision applies a service standards scheme to Powerlink for the first time.
On 15 December 2006 the AER received a supplementary revenue cap proposal from Powerlink. The proposal seeks higher levels of capital expenditure resulting from new information (e.g. revised demand forecasts and higher input costs). Powerlink has requested that the AER considers its supplementary revenue cap proposal when making its final decision.
Documents associated with the revenue reset, including Powerlink’s application, the AER’s draft decision, consultant’s reports and Powerlink’s supplementary revenue cap proposal can be found on the AER website. The AER invites written submissions in response to its draft decision and Powerlink’s supplementary revenue cap proposal. Submissions close on 9 February 2007. The AER will consider issues raised by interested parties before issuing its final decision.
On 21 December 2006 the ACCC released its final decision on APT Petroleum Pipelines Limited’s revised access arrangement for the Roma to Brisbane pipeline. This is the first time the ACCC has set reference tariffs for the RBP. The final decision does not approve APTPPL’s amended revised access arrangement in its current form and sets out the amendments required to be made for approval.
The pipeline’s initial capital base has been determined at $251.1 million rather than the $345.7 million proposed by APTPPL. A post-tax nominal return on equity of 11.70 per cent has been applied in calculating revenues. Forecast revenues for 2006–07 are $27.9 million, which is $4.1 million lower than proposed by APTPPL. The reference tariff determined by the ACCC is 10 per cent lower than the starting tariff proposed by APTPPL.
The ACCC has requested APTPPL to provide its amended revised access arrangement incorporating the required amendments by 9 February 2007.
Western Australian Wholesale Electricity Market Rules Authorisation
On 22 December 2006 the ACCC granted authorisation without conditions to the Western Australian Wholesale Electricity Market Rules under Part VII of the Trade Practices Act 1974. Activities in the wholesale electricity market include the sale (purchase) of electricity to (by) retailers or direct customers. The Western Australian Wholesale Electricity Market Rules final determination takes into account matters raised in response to the draft determination released on 22 September 2006. The interim authorisation will expire upon this decision taking effect on 12 January 2007. The authorisation is for a period of 15 years and expires on 1 July 2021.
This determination takes into account matters raised in response to the draft determination released on 22 September 2006.
The determination and the submissions received are available on the ACCC website.
Joint submissions by the AER and the Economic Regulation Authority on the National Gas Law and Rules exposure drafts
On 19 December 2006 the AER and the Economic Regulation Authority (ERA) of Western Australia provided a joint submission to the Ministerial Council on Energy in response to the exposure draft of the National Gas Law (NGL). This was supplemented on 21 December 2006 by joint comments on the National Gas Rules, which supported the transfer of well understood methodologies from the Gas Code to the Rules, while suggesting clarification of some issues.
Part 1 of the NGL submission is a discussion about where the NGL effectively addresses gas access reform and market development policy. It makes particular mention of the streamlined process to assess access arrangements, merit review, and information-management and reporting provisions supporting compliance with the ring-fencing obligations of service providers.
Part 2 contains proposals to achieve the policy objectives of the law more effectively. In this part of the submission the AER and ERA propose clarification of the assessment of an applicant’s proposal for particular elements of an access arrangement, the reference service criteria and the circumstances in which the regulator may make reasonable assumptions of fact contrary to an applicant’s. A consultative process for applying ring-fencing to services under pipeline management arrangements is proposed in this part of the submission, along with a clear test of when a pipeline can price-discriminate. The submission proposes that the Gas Code provisions for prudent discounts and rebatable services be reproduced, and suggest some procedural enhancements to the NGL.
Finally, the AER and ERA submit that stakeholders should not be put at risk of a possible adverse indemnity costs order by the Australian Competition Tribunal because this might discourage reasonable intervention by public interest groups in the merit review of regulatory decisions.
On 13 December 2006 the AER made a submission to the Energy Reform Implementation Group following the publication of its issues paper covering competitive market structures, a national transmission system and effective financial markets in energy. ERIG is to report to the Council of Australian Governments by April 2007 on new initiatives in energy reform.
The Ministerial Council on Energy’s Retail Policy Working Group (RPWG) released a third working paper by Allans Arthur Robinson (AAR) on 25 January 2007. The RPWG is charged with development of the 2007 legislative package to complete the transfer to the AEMC and AER of national distribution and retails regulation functions.
The third working paper covers the issues of business authorisation arrangements, ring-fencing and retailer failure arrangements.
The RPWG’s current and previous working papers are available on the Ministerial Council on Energy website. Submissions on the third working paper are due by 16 February 2007. A fourth working paper by AAR is anticipated in February before an official consolidated working paper is issued for final public consultation.
Transitional transmission guidelines—issue of first proposed guidelines
On 31 January 2007 the AER issued the first proposed guidelines and accompanying explanatory statements for electricity transmission businesses for public consultation. These guidelines are required under the new chapter 6A of the National Electricity Rules (NER) and the transitional provisions in clause 11.6.17.
The first proposed guidelines relate to:
the post–tax revenue model
the roll forward model
an efficiency benefit sharing scheme
a service target performance incentive scheme
submission guidelines
cost allocation guidelines.
The consultation period is open until Tuesday, 1 May 2007, after which the AER will issue a determination on or before 30 September 2007.
Under a further transitional provision in clause 11.6.18 of the NER, the first proposed guidelines have been provided to ElectraNet, SP AusNet and VENCorp so that these businesses can lodge their revenue proposals for their 2008 regulatory determinations in the coming months.
The AER is required to develop and/or maintain a number of other guidelines to complete the package of transmission regulatory guidelines. The AER will develop and will issue these guidelines separately.
Information on the guidelines and the consultation process is can be viewed on the
