ACCC sets ULLS indicative prices for 2008-09, issues discussion paper on Telstra's ULLS undertaking
The Australian Competition and Consumer Commission today set final copper local loop indicative prices for 2008-09 and issued a discussion paper on Telstra's ULLS undertaking.
The final indicative prices for the ULLS monthly charge to apply from 1 July 2008 to 31 July 2009 increase from the previous period. For instance, metropolitan (Band 2) indicative prices will increase from $14.30 to $16. This increase reflects the rise in interest rates and input costs.
"The release today of copper local loop indicative prices will provide greater certainty and guidance to industry," ACCC Chairman, Mr Graeme Samuel, said today. "A better informed market will give industry confidence in future growth and investment decisions, and encourage a more competitive market place.
"Setting indicative prices for the copper local loop will encourage a more stable and certain market place. This creates greater incentives for strong industry investment and therefore promotes vigorous and sustainable competition.
"Better service offerings for consumers in terms of price, quality and innovation are some of the benefits that flow from such competition."
The indicative prices are based on Telstra's PIE II cost model. The ACCC took the view that it would be inappropriate to use the recent Telstra Efficient Access cost model which has yet to be subject to external review and testing. In this regard, the ACCC encourages industry to respond to the ACCC's discussion paper on the Telstra's ULLS undertaking, of which the TEA model is a major element.
"The ACCC has begun a public consultation process and encourages industry participants to respond to the issues raised in the discussion paper to assist the ACCC in making its decision to accept or reject the undertaking."
Telstra is requesting a monthly charge of $30 for each ULLS in Band 2 Exchange Service Areas applying for the period to 31 December 2010.
In support of its undertaking, Telstra submitted the TEA model and other supporting documentation. A copy of Telstra's undertaking, public supporting material and the ACCC's discussion paper, is available from the ACCC's website.
The ACCC invites interested parties to provide written submissions by 12 August 2008.
The ACCC may seek to review its ULLS indicative prices upon making its final decision on Telstra's ULLS undertaking, which is likely to occur in November 2008, at the earliest.
Telstra has claimed confidentiality over the TEA model and other material to support its undertaking. Confidentiality arrangements put in place by Telstra are complex, and have the potential to be confusing. The ACCC will continue to maintain a watching brief on this issue, and would be interested to hear from parties having difficulties gaining access to material that restrict their ability to make constructive comments.
The ULLS allows telecommunications service providers to gain the use of the copper cables between end users and the telephone exchange. Service providers can use the ULLS in conjunction with their own equipment in telephone exchanges to provide a range of telecommunications services, including traditional voice services and broadband internet access.
1. ULLS indicative prices
The ACCC is required by section 152AQA of the Act to determine pricing principles for a declared service. The pricing principles may contain price-related terms and conditions and the ACCC may, when determining price-related terms and conditions, specify indicative prices. The ACCC intends that the indicative prices will be treated as price related terms and conditions under s.152AQA(2) of the Act.
The ULLS Pricing Principles provide that ULLS prices should be cost based, with necessary cost estimates derived from a TSLRIC+ methodology. The 2007 Pricing Principles give additional guidance on certain matters that arise in implementing the TSLRIC+ methodology for the ULLS.
2. ACCC discussion paper on Telstra's ULLS Undertaking
Legislative framework
Under Part XIC of the Trade Practices Act 1974, the ACCC may declare carriage services and related services. Once declared, carriers and carriage service providers who supply a declared service must comply with standard access obligations (SAOs) in relation to those services. The SAOs facilitate the supply of declared services by access providers to access seekers, allowing access seekers to provide carriage services and/or content services.
Where an access provider submits an undertaking, section 152BS provides that this is a written document given to the ACCC which indicates how the carrier or provider undertakes to comply with the terms and conditions specified in the undertaking in relation to the applicable SAOs.
Telstra's confidentiality arrangements
General information about Telstra's confidentiality arrangements, including the confidentiality undertakings, is located on the ACCC's website. For queries about executing the confidentiality undertakings, please contact Ms Rebecca Mitchell at Telstra (Rebecca.Mitchell@team.telstra.com or (02) 9298 4841).
