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.
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.
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 June, two telecommunications access disputes were notified to the ACCC under Part XIC of the Trade Practices Act 1974.
On 5 June 2007 Telstra Corporation Ltd (access seeker) notified the ACCC of an access dispute with Vodafone Network Pty Ltd (access provider) and Hutchison 3G Australia Pty Ltd (access provider) respectively.
Both access disputes relate to the price paid by the access seeker to the access provider for the domestic mobile terminating access service.
The ACCC has commenced the arbitration process for both disputes.
Draft decision to reject Optus’ undertakings for mobile terminating access service
On 21 June 2007 the ACCC announced its draft decision to reject the access undertakings submitted by Optus Mobile Pty Ltd and Optus Network Pty Ltd.
The Optus 2007 undertaking specifies certain terms and conditions upon which Optus undertakes to supply its domestic GSM terminating access service from 1 July 2007 to 31 December 2007 inclusive.
The ACCC's draft decision to reject the undertaking on the basis the price terms and conditions were not reasonable. In its submission supporting the undertaking, Optus indicated 12c per minute was an appropriate price for the supply of MTAS. The ACCC considered that Optus’s proposed price for the supply of the DGTAS is likely to significantly overstate the efficient costs of providing the service in Australia.
The ACCC is seeking submissions from interested parties on the draft decision by 6 August 2007.
Draft mobile terminating access service pricing principles determination
On 21 June 2007 the ACCC released a draft determination on pricing principles for the mobile terminating access service (MTAS).
The determination proposes an indicative price for the MTAS of 9c per minute from 1 July 2007 to 31 December 2008. The indicative prices have been informed by, among other things, the WIK Model.
Consumers and business derive benefit from lower MTAS prices through lower retail prices for mobile services and lower FTM rates, which the ACCC considers an important step in enhancing competition in this market.
The ACCC notes that while the reductions in FTM retail rates to date have been positive there is still opportunity for integrated operators such as Telstra and Optus to reduce retail FTM prices further, particularly for residential end users in line with reductions in MTAS.
The ACCC is now seeking submissions from interested parties by 6 August 2007.
View the determination, discussion paper and supporting material here.
ACCC releases discussion paper on FANOC (G9) special access undertaking
On 21 June 2007 the ACCC released a discussion paper on FANOC’s (G9) special access undertaking for broadband access services. FANOC Pty Ltd is a company formed by the G9 consortium of telecommunications carriers. FANOC proposes to build a fibre-to-the-node network.
FANOC proposes to supply broadband access services at standard rates to all carriers, including the members of the G9 consortium, Telstra and other users of the network. The undertaking specifies price and non-price terms and conditions upon which FANOC proposes to supply those broadband access services. It includes a proposed service description, proposed management principles for the governance of FANOC to maintain its independence from any carrier, and a method to determine FANOC's prices to access seekers.
The ACCC is seeking submissions on the discussion paper from interested parties by 7 August 2007.
View the undertaking and the discussion paper here.
ACCC publishes annual reports on the telecommunications industry
On 13 June 2007 the ACCC published two reports on the telecommunications industry—Telecommunications competitive safeguards and Changes in the prices paid for telecommunications services in Australia 2005–2006.
Telecommunications competitive safeguards
This report considers the competitive developments that occurred in the telecommunications industry as well as providing an overview of regulatory activities.
There were some noteworthy developments in the telecommunications industry in 2005–06. Users benefited from significant investment by numerous competing carriers in 3G mobile infrastructure and broadband-enabling equipment. However, competition in the industry was, to some degree, underpinned by regulation. Any unforeseen changes to the price and availability of access services could materially alter the state of competition. Investment by competing carriers also remains at risk from prospective fibre-to-the-node network upgrades.
Changes in the prices paid for telecommunications services in Australia 2005-06
The main findings of this report included:
The overall average price paid by consumers fell in real terms by 6.5 per cent.
Average real prices paid for fixed-line services fell by 6.6 per cent.
Average real prices for mobile services declined by 6.5 per cent.
Average prices for fixed-to-mobile calls dropped by 10.5 per cent.
Average line rental prices fell by 2.4 per cent, after six years of increases.
ACMA and ACCC issue joint report on communications infrastructure and services availability
On 26 June 2007 the ACCC and ACMA issued a joint report titled Communications infrastructure and services availability in Australia 2006-07.
The report discusses the availability of broadband, fixed voice, mobile voice, mobile data and broadcasting infrastructure and services. The report makes use of data already collected by ACMA as part of its annual data request to industry and draws heavily on publicly available sources, including Australian Bureau of Statistics (ABS) data, listed company reports, news items and media releases.
Key findings identified in the report include:
19 internet service providers (ISPs) providing broadband services via DSLAM deployments in exchanges across Australia (the same number of providers identified at 30 June 2006).
Growth in the availability of ADSL services, with an additional 323 exchanges enabled between 30 June 2006 and 31 January 2007.
Growth in the availability of ADSL2+ services, with 412 exchanges providing ADSL2+ services (compared to 309 at June 30 2006).
Internet connections with download speeds of 1.5Mbits or greater increased to 1.56 million (end March 2007), compared to 1.09 million subscribers at the end of September 2006.
Increased mobile data rates available with all four mobile carriers upgrading their 3G networks to the high-speed downlink packet access (HSDPA) protocol.
Increased interest in provision of voice services using voice over internet protocol (VOIP), which is a service enabled by broadband, drawing some 369 providers into the voice market.
The availability report series reflects ACMA and the ACCC's continuing interest in joint collection and analysis of data on the availability of services and infrastructure throughout Australia. This will assist ACMA in its input to the Regional Telecommunications Independent Review Committee (RTIRC), which is to be convened in 2008, to review the adequacy of telecommunications services in regional, rural and remote Australia.
Powerlink Queensland transmission network revenue cap decision On 14 June 2007 the AER released its final decision on the revenue cap to apply to Powerlink for the regulatory control period 1 July 2007 to 30 June 2012. The AER has set maximum allowed revenues ranging from $537 million in 2007–08 to $815 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 final decision provides for a significant increase in investment in Powerlink’s transmission network. The AER has approved an investment allowance of $2629 million during the next regulatory period that will enable Powerlink to respond to the strong growth in forecast electricity demand by both residential and industrial customers and to replace ageing network assets. In addition to the ex ante allowance, the AER has approved indicative contingent projects totalling $1383 million. The AER determined a total operating and maintenance allowance of $731 million for the regulatory period, increasing from $141 million in 2007–08 to $150 million in 2011–12. The final decision also applies a service standards scheme to Powerlink for the first time.
Documents associated with the revenue reset, including the AER’s final decision, consultant’s reports and Powerlink’s application and supplementary revenue cap proposal can be found on the AER website.
ElectraNet transmission determination
On 29 June 2007 the AER published ElectraNet’s revenue proposal, proposed negotiating framework and proposed pricing methodology for the period 1 July 2008 to 30 June 2013 for consultation.
Documents associated with the transmission determination, including ElectraNet’s revenue proposal and its attachments, proposed pricing methodology and proposed negotiating framework, can be found on the AER website. The AER invites written submissions in response to ElectraNet’s proposal. Submissions close on 17 August 2007. The AER will take into consideration issues raised by interested parties before issuing its draft decision.
The AER intends to hold a public forum on the proposal submitted by ElectraNet on Tuesday, 24 July 2007 in Adelaide.
The AER’s proposed Negotiated Transmission Service Criteria for ElectraNet
Under clause 6A.9.4 of the National Electricity Rules (NER) the AER’s transmission determination for ElectraNet must set out the negotiated transmission service criteria (NTSC). The NTSC will be applied by ElectraNet to negotiate the terms and conditions of access for negotiated transmission services and access charges. The NTSC will also be used by a commercial arbitrator in resolving any dispute between ElectraNet and a person wishing to receive a negotiated transmission service.
The NTSC determined by the AER must give effect to, and be consistent with, the negotiated transmission services principles set out in clause 6A.9.1 of the NER.
The AER’s proposed negotiated transmission service criteria (NTSC) can be found on the AER website.
The AER will make a separate determination of ElectraNet’s NTSC as a part of the transmission determination for ElectraNet. The AER invites written submissions in response to its proposed NTSC. Submissions close on 17 August 2007. Submissions will be taken into account in making the draft determination on the NTSC that will apply to ElectraNet.
The AER’s proposed Negotiated Transmission Service Criteria for SP AusNet and VENCorp
Under clause 6A.9.4 of the National Electricity Rules (NER) the AER’s transmission determinations for SP AusNet and VENCorp must set out the negotiated transmission service criteria (NTSC). The NTSC will be applied by SP AusNet and VENCorp to negotiate the terms and conditions of access for negotiated transmission services and access charges. The NTSC will also be used by a commercial arbitrator in resolving any dispute between SP AusNet or VENCorp and a person wishing to receive a negotiated transmission service.
The NTSC determined by the AER must give effect to, and be consistent with, the negotiated transmission services principles set out in clause 6A.9.1 of the NER.
The AER’s proposed negotiated transmission service criteria (NTSC) can be found on the AER website.
The AER will make a separate determination of both SP AusNet and VENCorp’s NTSC as a part of the transmission determinations for those businesses. The AER invites written submissions in response to its proposed NTSC. Submissions close on 3 August 2007. Submissions will be taken into account in making the draft determination on the NTSC that will apply to SP AusNet and VENCorp.
SP AusNet transmission determination
On 28 February 2007 SP AusNet submitted its revenue proposal and proposed negotiating framework and pricing methodology to the AER. On 31 May 2007 SP AusNet submitted a report by NERA Economic Consulting that identifies an apparent bias in using indexed Commonwealth Government Securities (CGS) as a proxy for the real risk free rate. On 14 June 2007 SP AusNet submitted a second report by NERA on the absolute bias in CGS yields. SP AusNet considers there to be a compelling case that continued use of CGS yields to estimate the real risk-free rate significantly underestimates of the allowed cost of capital. SP AusNet also supports NERA's recommendation to correct this apparent bias in the real risk free rate. Documents associated SP AustNet transmission determination, including NERA’s reports, can be found available on the AER website.
Due to the late submission of this information, the time available for public consultation on this issue prior to the release of the AER's draft decision is limited. Interested parties have been invited to provide written submissions on these documents to the AER by close of business Friday, 3 August 2007.
Annual electricity transmission regulatory report for 2005–06
On 14 June 2007 the AER released its annual report detailing information from regulated electricity transmission businesses. The report aims to provide greater transparency about the financial and operational performance of those businesses.
The report provides information on each of the transmission businesses revenue, profit, capital and operating expenditure and service standards for the 2005–06 financial year. The businesses covered in the report are ElectraNet, EnergyAustralia, Murraylink, Powerlink, SP AusNet, Transend, TransGrid and VENCorp. The AER’s 2005–06 and preceding electricity transmission regulatory reports can be found on the AER website.
GridX network service provider exemption
On 8 June 2007 the AER released its decision not to grant a general (or class) exemption to GridX Power Pty Ltd (GridX) from the requirement to register as a network service provider (NSP) and comply with relevant provisions of the National Electricity Law (NEL) and National Energy Rules (NER). The AER noted that it may be more appropriate to assess future applications from GridX under the specific exemption provisions of the guideline. Under this approach, the AER would consider granting GridX specific exemptions from the NEL and the NER, subject meeting certain conditions, including those associated with complying with particular retail pricing and service obligations.
GridX proposed an innovative method of delivering electricity to residential customers using gas-fired micro-generators embedded within housing estates electricity networks. Excess energy generated would be exported to the National Electricity Market (NEM), but the network would be configured so that the import of electricity into the housing estates from the NEM would not be possible.
Documents associated with the decision can be found on the AER website.
On 22 December 2006 AGL Wholesale Gas Limited (AGLWG) notified the ACCC of an access dispute with East Australian Pipeline Limited on covered portions of the Moomba to Sydney Gas Pipeline for the purposes of s. 6.1 of the Gas Code. The ACCC commenced the process of arbitrating the dispute consistent with its dispute resolution guideline.
On 12 June 2007 AGLWG notified the ACCC of its withdrawal of its notification of an access dispute under s. 6.5 of the National Third Party Access Code for Natural Gas Pipeline Systems (the Gas Code). The parties reached a negotiated outcome consistent with the objective of a negotiate/arbitrate framework.
Draft electricity transmission information guidelines
In June 2007 the AER released an issues paper and draft information guidelines for electricity transmission. The draft guidelines provide instructions to regulated electricity transmission network service providers (TNSPs) about the information to be submitted to the AER for annual reporting purposes.
The draft Information guidelines set out the manner, date and form in which, and date by which, TNSPs should submit the following information to the AER:
certified annual statements
service performance information
any additional information that the AER reasonably requires for a purpose set out under the NER.
The guidelines also detail the information that a TNSP must provide:
when seeking the approval of the AER to pass through a positive pass through amount or a negative pass through amount
a reduction in prices under clause 6A.26.2(b) of the NER and cost allocation among TNSPs.
The purpose of these information guidelines is to provide greater upfront certainty to regulated businesses on the types of information that will be relevant to the AER’s needs and to streamline this process as much as possible. As with the related submission guidelines (issued 31 January 2007), this will facilitate better informed and more timely decision making that promotes the broader NEM objective. The issues paper and the draft information guidelines can be found on the AER website.
Developing incentives based on the market impact of transmission congestion
In June 2007 the AER released an issues paper canvassing options to introduce a new service standards incentive that rewards transmission network service providers for reducing the number and duration of outages that have a market impact and providing more advanced notice of outages. This issues paper builds on the recent work the AER has undertaken into reporting indicators of the market impact of transmission congestion.
The AER invites written submissions on the issues paper by 17 August 2007. Following consideration of submissions the AER will publish a draft decision later this year. The intention is to finalise the details of this scheme before April 2008 and to apply any parameters in the service target performance incentive scheme for regulatory determinations after that date. The issues paper and other supporting documentation can be found on the AER website.
