ACCC issues Telstra accounting separation report for March quarter 2007

The Australian Competition and Consumer Commission today issued its 15th 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 March 31 2007.

This report presents an imputation analysis comparing the retail price charged by Telstra with the prices of the three core* telecommunications access services. The analysis is designed to indicate whether margins are sufficient to allow efficient firms to compete against Telstra in the retail market. The analysis is not intended to detect all forms of potentially anti-competitive conduct.

The imputed margins that are reported across the bundle of fixed-voice services have increased in the quarter. Margins for services supplied over the unconditioned local loop service (ULLS) have also increased.

The report also compares Telstra's customer service levels for wholesale and retail fixed-line telephony and ADSL customers. The report does not indicate any material discrimination by Telstra has occurred for the March 2007 quarter.

The report will be available on the ACCC website.

*The three core access services are the local carriage service, the PSTN originating and terminating access service, and the unconditioned local loop services (ULLS). The ULLS allow a competitor to lease the use of a customer's line to supply any combination of access, voice, ADSL or other data services.

Background

The accounting separation regime was introduced to address competition concerns arising from the level of vertical integration between Telstra's wholesale and retail services, and also to improve the provision of price and cost information to the ACCC, competing telecommunications service providers, and the public.

On 19 June 2003, the Minister for Communications, Information, Technology and the Arts directed the ACCC to issue record-keeping rules to Telstra, requiring Telstra to report on:

• current costs in addition to historical costs under the Telecommunications Industry Regulatory Accounting Framework (CCA reports)
• imputation analysis comparing Telstra's retail prices and the costs faced by access seekers in purchasing certain core telecommunications services from Telstra (imputation reports)
• key performance indicators on non-price terms and conditions that compare Telstra's customer service performance between specified retail and wholesale supplied services (NPTC reports).

The direction requires that the ACCC make the reports publicly available and comment on the reports submitted. In accordance with the direction, the ACCC first issued record-keeping rules to Telstra in June 2003. The ACCC issued revised rules in September 2004.