ACCC issues Telstra accounting separation report for December quarter 2007

The Australian Competition and Consumer Commission today issued its eighteenth report under the enhanced accounting separation regime for Telstra.

The reports concern whether systematic discrimination could be occurring in the price or service quality offered to Telstra retail and wholesale customers. They are not intended to detect all forms of potentially anti-competitive conduct.

The latest report, which presents data for the quarter ending 31 December 2007, includes:

• an imputation analysis which tests whether sufficient margins likely exist to allow efficient firms that acquire three core* access services from Telstra to compete against Telstra in the retail market, and
• key performance indicators concerning Telstra's service levels when connecting or repairing faults on wholesale and retail fixed-line telephony and ADSL services.

Results of the imputation tests are mixed, but on the whole the imputed margins improved during the quarter. The key performance indicators suggest that service levels when connecting some wholesale fixed-line telephony services slipped during the quarter, but otherwise wholesale customers on average received service levels practically as good as or better than retail customers.

The report will be available on the ACCC website.

Background

The enhanced 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 then 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 these rules in September 2004.