Release of the Mobile Terminating Access Service Pricing Principles Determination, rejection of Optus's undertaking

The Australian Competition and Consumer Commission has issued the MTAS Pricing Principles Determination relevant for 1 July 2007 to 31 December 2008.  The previous MTAS Pricing Principles Determination expired on 30 June 2007.*

The Trade Practices Act 1974 requires the ACCC to have regard to a pricing principles determination if the ACCC is required to arbitrate a MTAS access dispute. 

The MTAS Pricing Principles Determination proposes an indicative price for the MTAS of 9 cents per minute from 1 July 2007 to 31 December 2008.

The indicative prices have been informed by the WIK Model, international cost benchmarks and other cost models.

Any future pricing determinations will consider a range of factors as set out in the supporting documentation and will continue to consider efficiently incurred costs of MNOs with reference to actual costs consistent with the Australian Competition Tribunal's position.

The MTAS Pricing Principles Determination and other supporting material are available on the ACCC's website.

The ACCC today also announced its final decision to reject the access undertakings submitted by Optus Mobile Pty Limited and Optus Network Pty Limited (together, Optus).**

The Optus 2007 Undertaking claimed 12cpm was a reasonable price for the supply of the MTAS.

"The ACCC has rejected the Optus 2007 Undertaking because it cannot be satisfied that the price terms and conditions are reasonable," ACCC Commissioner, Mr Ed Willett, said.  "The Tribunal has placed a clear obligation on providers to establish that their costs are efficient costs and Optus has not provided evidence to support the price in its undertaking."

Copies of the ACCC's final decision will be available on the ACCC website.

Background

*The Domestic Mobile Terminating Access Service is a wholesale input, used by providers of fixed-to-mobile and mobile-to-mobile calls, to allow their customers to call mobile subscribers. It allows consumers (either fixed-line or mobile) to call mobile users. If a call made by the carrier's customer terminates on another mobile network, then the carrier pays the other network owner for the mobile termination access service.

The current public consultation process on the MTAS Pricing Principles Determination for the period 1 July 2007 to 31 December 2008 has been part of an extensive consultation process which began with the Mobile Services Review in 2003.

That consultation process informed the MTAS Pricing Principles Determination for the period 1 July 2004 to 30 June 2007, which expired on 30 June 2007. 

To support future pricing principles determination for MTAS, in March 2006 the ACCC issued a request for tender seeking the services of a consultant to construct a bottom-up cost model with specific economic and engineering parameters for mobile termination access services in Australia. 

WIK Consult was engaged in June 2006 and has worked with the ACCC to develop a bottom-up cost model that estimates the efficient cost of supply of the MTAS in Australia using a TSLRIC conceptual framework.

The ACCC commenced a public consultation process on the WIK Mobile Network and Cost Model on 1 February 2007 which concluded on 16 March 2007. The Draft MTAS Pricing Principles Determination was released on 21 June 2007 with submissions being due by 6 August 2007.  Submissions received during the public consultation process have informed the indicative prices outlined in the MTAS Pricing Principles Determination.

**On 16 February 2007, Optus lodged an ordinary access undertaking (Optus 2007 Undertaking) with the ACCC about the mobile terminating access service (MTAS).

On 29 August 2007 the ACCC extended the decision-making period for the assessment of the undertaking until 13 December 2007.

The Optus 2007 Undertaking specified certain terms and conditions upon which Optus undertakes to supply its domestic GSM terminating access service (DGTAS) for the period 1 July 2007 to 31 December 2007 inclusive.