ACCC grants Telstra local carriage service and wholesale line rental exemptions
The Australian Competition and Consumer Commission today decided to grant Telstra exemptions from its obligations to supply two "declared" services in parts of metropolitan Australia, subject to a number of conditions.
The decision relates only to wholesale voice services, not broadband services - which are not subject to open access regulation.
The exemptions, which cover 248 exchange service areas, are not as broad as those requested by Telstra.
The rationale for granting the exemptions is that access regulation should focus on those elements of the fixed-line network that continue to represent "enduring bottlenecks". Enduring bottlenecks generally refer to a network element or facility that exhibits natural monopoly characteristics and is "essential" to providing services to end-users in downstream markets.
The ACCC is of the view that wholesale voice services no longer represent an "enduring bottleneck" in the areas subject to exemption. This is because access seekers are able to use their own DSLAM or MSAN facilities to provide voice services by making direct use of Telstra’s unbundled copper through the declared Unconditioned Local Loop Service (ULLS).
The exemptions are subject to a number of conditions dealing with impediments faced by some access seekers when seeking to use the ULLS. Specifically, these impediments include the capping of exchanges by Telstra, lengthy queues to enter into Telstra’s exchange buildings and service disruptions when migrating from the line sharing service to the unbundled local loop service.
The ACCC has addressed submissions raised by access seekers that the Government’s current National Broadband Network process is deterring investment in ULLS-based infrastructure due to concerns that this infrastructure could become stranded by a fibre rollout. The ACCC understands these concerns, but considers these exemption orders will not require access seekers to invest in significant amounts of new infrastructure. This is because, in the majority of areas covered by the exemption orders, a competitively-priced commercial offering of a re-sale voice service will likely be available.
This decision follows a period of consultation on the drafting of the conditions imposed upon the exemption orders.
Media inquiries
Ms Lin Enright, Media, (02) 6243 1108or 0414 613 520
Mr Graeme Samuel, Chairman, 0408 335 555
Mr Ed Willett, Commissioner, 0414 559 999
Release # NR 241/08
Issued: 22nd August 2008
Background
The local carriage service is a wholesale local call service that allows access seekers to resell local calls to end-users.
The wholesale line rental service involves the provision of a basic line rental service that allows an end-user to connect to the public switched telephony network.
The LCS was declared by the ACCC in August 1999 and re-declared in July 2006. WLR was declared by the ACCC in July 2006.
Following the ACCC's decision to declare a service under Part XIC of the
Trade Practices Act 1974, standard access obligations exist for any carriers or carriage service providers providing that service, whether to themselves or to other persons. The obligations include the requirement that the regulated service must be provided to service providers, along with specified ancillary services, on request.
A carrier can apply to the ACCC for a written order exempting it from any, or all, of the SAOs that apply to a regulated service. In deciding whether to make an order or not, the ACCC must consider whether it will promote the long-term interests of end-users of the carriage services, or services provided by means of carriage services.
On 9 July 2007, Telstra lodged two exemption applications pursuant to section 152AT of the Act, seeking exemption from its SAOs in relation to supply of WLR and LCS in 371 metropolitan exchange service areas (ESAs). On 12 October 2007, Telstra lodged two further applications for exemption, seeking exemption in a further 16 metropolitan ESAs. In total Telstra sought exemption from its SAOs to supply WLR and LCS in 387 metropolitan ESAs.
On 29 April 2008, the ACCC released a draft decision proposing to grant Telstra exemptions in parts of metropolitan Australia, subject to a number of conditions.
On 13 August 2008, the ACCC made an in-principle final decision to grant Telstra exemptions in parts of metropolitan Australia, subject to a number of proposed conditions and limitations, and also released for public consultation a document outlining the conditions and limitations proposed to be made in the Final Decision.
In its final decision made today, the ACCC, in assessing Telstra’s exemption applications, considered whether granting exemptions in any or all of the 387 ESAs over which exemptions were sought would promote the long-term interests of end-users, as defined by the TPA.
The ACCC noted that, as an alternative to reselling Telstra’s services, access seekers are able to use their own DSLAM or MSAN facilities to provide voice services by making direct use of Telstra’s unbundled copper through the declared Unconditioned Local Loop Service (ULLS).
The ACCC recognised that determining the precise sub-set of ESAs where ULLS-based entry and effective competition in fixed voice services is likely to occur upon granting exemptions was a finely balanced process – one which took into account the actual competition within each ESA as well as the potential for increased competition. The sub-set of ESAs determined by the ACCC to be subject to exemption are those in which there are 14,000 or more addressable services in operation or four or more ULLS-based competitors (including Telstra), subject to a number of conditions and limitations.
