The Australian Competition and Consumer Commission 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 can be viewed on the public register.
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.
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.
No interim determinations were made in April 2007.
Notification of access disputes
During April 2007 one telecommunication access dispute was notified to the ACCC under Part XIC of the Trade Practices Act.
On 16 April 2007 the ACCC announced that Chime Communications Pty Ltd had notified the ACCC of an access dispute with Telstra Corporation Limited. The access dispute relates to the price for the supply of the wholesale line rental service supplied by Telstra to Chime.
The ACCC has commenced the arbitration process for this access dispute.
On 5 April 2007 the Federal Court held that the ACCC was not entitled to issue the Part A competition notice to Telstra. The court found that the competition notice differed in substance from the earlier consultation notice in the kind of anti-competitive conduct it described.
In December 2005 the ACCC issued a consultation notice to Telstra because it increased its wholesale prices for line rental above the vast majority of its retail prices for the line rental component of fixed line plans. In April 2006 the ACCC issued a competition notice which provided some information that was not in the consultation notice. The ACCC considered that the differences between the consultation notice and competition notice were not substantial, but rather provided particularisation and focusing of the allegations.
In May 2006 Telstra challenged the validity of the competition and consultation notices on a wide variety of grounds. Justice Bennett of the Federal Court dismissed the large majority of Telstra’s complaints, holding that:
the difference between the notices were to be expected because the consultation notice need only describe conduct in summary form and because the ACCC is obliged to consider Telstra’s submission before issuing a competition notice
the terms of the consultation notice did not lack clarity and were not circular but were certain and sufficiently clear
the terms of the competition notice were clear and set out the matters as required by the statute
the ACCC did not need to provide all the material and analysis sought by Telstra, but only notice of additional material that went to matter not described in the consultation notice, or the substance of those matters
the ACCC acted lawfully in not furnishing Telstra with reasons for issuing the notices.
However the court found that the ACCC was not entitled to issue the competition notice because it differed from the consultation notice in respect of two matters held to be of substance. The court found that because Telstra was not given details of those matters when the ACCC consulted with it, Telstra was not afforded the opportunity to address relevant issues.
The ACCC will assess the full impact of the decision on the application of the law and options to address any impediments in its effective operations.
ACCC issues Telstra accounting separation report for December quarter 2006
On 10 April 2007 the ACCC issued its fourteenth 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 December 2006.
The report presents an imputation analysis that compared Telstra’s retail prices to the prices of three core telecommunications access services. The analysis is designed to indicate whether there is likely to be sufficient margins to allow efficient firms to compete at the retail level. The analysis is not intended to detect all forms of potentially anti-competitive conduct.
The imputed margins reported across the bundle of fixed-voice services remained constant in the quarter, with reduced margins for services supplied over the unconditioned local loop core service.
The report also compares Telstra's customer service levels for wholesale and retail fixed-line telephony and ADSL customers. The report does not indicate systematic discrimination by Telstra against its wholesale customers.
On 17 April 2007 the ACCC issued a position paper outlining a robust framework for the review of existing regulation and the principles that will guide future regulatory decisions.
The position paper presents the next installation of the ACCC’s continuing Fixed Services Review, which was initiated by the ACCC in December 2005.
A key element of the position paper is a robust framework for the review of existing regulation. This is intended to provide certainty to industry on the approach taken by the ACCC, including the timing of future reviews. The paper discusses the ACCC belief that regulation should be targeted at 'enduring bottlenecks' in fixed-line markets and removed where it is not required to promote the long-term interests of end-users.
The position paper also commences a declaration inquiry for the line sharing service, which was originally declared in 2002.
Powerlink Queensland transmission network revenue cap
The Australian Energy Regulator made its draft decision on the revenue cap to apply to Powerlink from 1 July 2007 to 30 June 2012 on 8 December 2006. 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). Submissions on the draft decision closed on 9 February 2007.
On 30 March 2007 Powerlink provided additional information to the AER on the estimated inflation forecast used in its draft decision. Powerlink’s submission related to an alleged bias in the yields of indexed Commonwealth Government Securities, which are used as a proxy for the real risk free rate. Powerlink’s submission referred to the findings of a NERA report, commissioned by the Energy Networks Association. The AER sought interested parties' views on this issue by 20 April 2007, particularly about whether the issue could be properly addressed in the time remaining for finalising its final decision in late May 2007. The AER received ten submissions and will consider submissions as part of finalising its decision. The AER expects to release its final decision in late May 2007.
Documents associated with the revenue reset, including AER's draft decision, Powerlink’s application and supplementary revenue cap proposal, submissions from interested parties and the consultant's reports can be found on the AER website.
SP AusNet and VENCorp transmission network revenue cap
On 28 February 2007 SP AusNet submitted its revenue cap proposal, proposed negotiating framework and pricing method to the AER. On 1 March 2007 VENCorp submitted its revenue proposal and negotiating framework to the AER. Its pricing methodology is due separately by 31 May 2007.
The AER conducted a preliminary examination of SP AusNet's and VENCorp's revenue proposals as required by clause 6A.11.1 of the National Electricity Rules. Additional information was sought from both SP AusNet and VENCorp to satisfy the requirements of the AER's submission guidelines and the NER.
On 30 April 2007 the AER received SP AusNet and VENCorp’s revised revenue cap proposals and supporting information.
The AER wishes to advise interested parties that it is holding a public forum on SP AusNet and VENCorp revenue cap proposals on Thursday, 10 May 2007, commencing at 10 am. The AER also invites written submissions in response to both revenue cap proposals. Submissions close on 13 June 2006. The AER will take into consideration issues raised by interested parties before issuing its draft decision.
Documents associated with the SP AusNet and VENCorp revenue resets, including both revenue cap proposals and further details regarding the public forum are available on the AER website.
Service standards compliance review for 2006
On 24 April 2007 the AER released its service standards compliance review for the 2006 calendar year. The AER and its expert consultants, Sinclair Knight Merz (SKM) and PB Associates (PB), reviewed the reporting systems and results for seven transmission network service providers (TNSPs). PB reviewed EnergyAustralia’s performance results and SKM reviewed the results for SP AusNet, TransGrid, Murraylink, Transend, Directlink and ElectraNet.
Documents associated with the AER’s service standards compliance review for 2006, including the consultants’ reports and TNSPs' submissions, are available on the AER website.
Transmission pricing methodology guidelines issues paper
In making a transmission determination, the AER is required to include a decision to approve a TNSP’s proposed pricing methodology for use during the next regulatory control period. The NER require the AER to publish transmission pricing methodology guidelines for TNSPs by 31 October 2007. On 4 April 2007 the AER released the transmission pricing methodology guidelines issues paper.
The rules allow the AER to develop and publish consultation, discussion or issues papers in relation to the development of a guideline. The issues paper is the first step in the pricing methodology guidelines stakeholder consultation process. The paper outlines the key areas the guidelines must address, canvasses a number of options and seeks submissions from interested parties.
The AER does not indicate a preferred option in the issues paper. Interested parties have until 16 May to make submissions on the issues paper. The AER will consider submissions as part of developing draft guidelines, which are anticipated to be released in July.
Fourth medical indemnity insurance monitoring report
On 12 April 2007 the Australian Government issued the ACCC’s report monitoring medical indemnity insurance premiums, Medical indemnity insurance: fourth monitoring report.
The report found that premiums written in 2006–07 were considered to be both actuarially and commercially justified for all six medical indemnity providers.
The report also provided information on the actuarial and commercial justification of premium relativities between jurisdictions. The ACCC’s assessment of the actuarial justification of these premium relativities examined the extent and the level of detail of the analysis by medical indemnity providers to confirm or modify existing relativities, and the extent to which medical indemnity providers took into account tort law reform in setting their jurisdictional relativities. The report found that, based on the information available, jurisdictional relativities were justified.
A copy of the report can be found on the ACCC website.
