ACCC sets reasonable terms of access to the Line Sharing Service
The Australian Competition and Consumer Commission today published a final determination made in the arbitration of a dispute over access to the Line Sharing Service*.
The final determination specifies certain of the terms on which Telstra supplies the LSS to Chime Communications. These are LSS rental charges, and the terms on which wholesale ADSL services are migrated to the LSS. This follows the parties being unable to agree on them, and Chime notifying the dispute for ACCC arbitration.
The ACCC has specified a LSS rental charge of $2.50 per service per month, and has reduced the charges and timeframes to migrate in bulk wholesale ADSL services to the LSS. The specified charges are to apply for the period from 1 June 2004 until 31 December 2007.
"This move to reasonable terms of access and pricing for the LSS will bring significant long term benefits to consumers of broadband services", ACCC Chairman, Mr Graeme Samuel, said. "It will provide consumers with more diversity of service providers, supplying a greater range of services that are of higher quality and at more reasonable prices. It will also ensure that customers who pay the full cost of renting a line for voice services have access to broadband services at no more than the extra costs of providing that service on the same line."
The charges result from applying the ACCC's long-standing pricing principles for the LSS (August 2002) and, in respect of LSS rental charges, the ruling of the Australian Competition Tribunal (June 2006).
Telstra proposed in previous regulatory proceedings an LSS rental charge of $9 per service per month, which was opposed by access seekers, and considered not to be reasonable by both the ACCC (December 2005) and the Australian Competition Tribunal (June 2006). Despite these rulings, Telstra continued to require access seekers to pay a $9 per month charge.
A key issue in this arbitration was whether a contribution to the costs of the line over which the LSS is supplied should be included in the LSS rental charges to apply until 31 December 2007. The ACCC decided against doing so.
The ACCC has for some time recognised that economic efficiency could be enhanced by the inclusion of an appropriate contribution to line costs in LSS rental charges. However, where line rental charges fully recover line costs, the inclusion of such a contribution in LSS rental charges would lead to an over-recovery of network cost. In these circumstances, reductions in charges for other network services, such as wholesale line rental, are needed in order to avoid any such 'double dipping'.
The final determination and statement of reasons will be available on the ACCC's website.
The LSS allows two carriers to provide separate services over a single metallic pair or line. The higher frequency part of the line is used by the access seeker to supply broadband (DSL) services, while the access provider supplies a PSTN voice service over the same line. The LSS was declared on 30 August 2002.
The ACCC is vested with arbitration powers enabling it to make directions and 'do all things necessary for the speedy hearing and determination of an access dispute'. For the ACCC to engage in arbitration, an access seeker and/or an access provider must notify the ACCC of an access dispute. The ACCC may arbitrate an access dispute only where:
a declared service is supplied or proposed to be supplied by a carrier or carriage service provider
one or more standard access obligations apply or will apply to the carrier or carriage provider in relation to the declared service, and
an access seeker is unable to agree with the carrier or carriage service provider regarding the terms and conditions on which the carrier or carriage service provider is to comply with the standard access obligations.
Where a dispute cannot be resolved after private negotiations, mediation and/or conciliation, either of the access parties may refer the matter to the ACCC. Arbitration by the ACCC would be considered as a final solution for the parties in dispute. Where the ACCC is notified of an access dispute the ACCC must determine the matter, unless it decides to terminate the arbitration or the notification is otherwise withdrawn.
Chime and Telstra have been negotiating over terms of access to the LSS since 2003. While many aspects of access have been able to be agreed, they have been unable to agree upon LSS rental charges and network migration terms. Chime notified this dispute to the ACCC for arbitration in November 2005.
The ACCC can backdate a final determination to apply from a time no earlier than the commencement of negotiations. In this arbitration, the ACCC has backdated aspects of the final determination to June 2004, which is when Telstra commenced supplying the LSS to Chime.
In addition to the dispute that Chime notified, there are eight other disputes over access to the LSS that are currently before the ACCC for arbitration. The ACCC has issued final determinations in two of these disputes, and is consulting the parties on publication of those final determinations. The ACCC is moving towards the making of final determinations in the remainder of these arbitrations.
