ACCC seeks views on Telstra 50c directory assistance proposal

Interested parties wanting to make submissions to the Australian Competition and Consumer Commission's review of Telstra's proposal to charge for directory assistance must do so by 18 July.

The ACCC has 30 days from 2 July to review Telstra's proposal after the company's notification to Communications and Arts Minister, Senator Alston, that it wished to charge 50c for 013 calls in certain circumstances.

The Minister may disallow the proposal, but only after receiving an ACCC recommendation, The ACCC must make its recommendation by 1 August. The ACCC has prepared an issues paper which details Telstra's proposal and seeks to focus on key issues which interested parties may wish to address. The ACCC is canvassing the views of consumer, rural, industry and business groups.

"The tight deadline means the consultation process will be intense," ACCC Commissioner responsible for consumer protection issues in telecommunications, Mr David Lieberman, said today. Mr Lieberman will be heading a committee consisting of the ACCC Chairman, Professor Allan Fels and Mr Rod Shogren, Commissioner responsible for telecommunications, which will be considering this matter.

"The ACCC will hold discussions with interested parties in Melbourne, Sydney, Dubbo, Adelaide, Perth and Townsville, commencing Monday 14 July and and seeks written submissions by the 18 July deadline. This deadline cannot be extended."

Further information Mr David Lieberman, ACCC Commissioner, (06) 264 1412 or (0416) 264 333 Ms Lin Enright, Director, Public Relations, (06) 264 2808

Background

Proposal by Telstra to charge for calls to directory assistance (013) service

issues paper

Telstra Corporation notified the Minister for Communications and the Arts on 2 July 1997 that it proposes to introduce a 50c charge for certain calls to directory assistance service information (013). Such calls are currently provided free of charge. Under section 24 of the Telstra Corporation Act 1991, Telstra cannot introduce a charge for directory assistance services unless it first notifies the Minister at least 30 days prior to its introduction. The Minister has the power to disallow the proposal, however, he can only to so after receiving a recommendation from the Australian

The Minister referred Telstras proposal to the ACCC (also on 2 July) for advice on whether the proposed charge should be disallowed in the public interest. The ACCC has 30 days in which to provide its report to the Minister and Telstra has been directed not implement its proposal until the Minister has received and considered the ACCC's report.

This paper raises some key issues that the ACCC is required to address in its report in order to focus discussion and debate, with a view to obtaining specific comments from the public that it can consider in preparing its report.

Telstra Proposal

In its submission to the Minister, Telstra claims that Directory assistance was originally established to supplement the local White PagesTM directory, in order to supply new or changed listings or those not found in the local directory (eg. out of area listings). However, Telstra contends that most of the growth and use of this service is discretionary, ie. for numbers which are already correctly listed in the local White PagesTM directory. According to Telstras market research, 70 per cent of requests to Telstras directory assistance service are for such numbers. This heavy discretionary use of 013 services has resulted in significant delays for those who genuinely need to use this service to obtain information which is not contained in the White PagesTM directory. It is against this background, and the associated higher costs, that Telstra proposes to introduce a charge for Directory Assistance 013 services. Telstras proposal contains several major features, viz:

A 50c charge will apply only to calls (maximum two queries per call) to Directory Assistance for numbers which are correctly listed in the current local White PagesTM directory. No charge will therefore apply for new, changed or other numbers not listed or not listed correctly in the White PagesTM directory.

The proposal will be revenue neutral, in the first year, with all customer revenue generated from the charge returned to customers in the form of a reduction in the Telstra basic access line rental of $5.40 per line per annum, based on the revenue which is expected to be generated. [Currently, residential line rental charges are about $140 per year and business line rentals are $240 per year.]

No charge for directory assistance will apply to customers who for whatever reason cannot read, hold, or use a printed directory. Calls to Directory Assistance from either a Telstra or private payphone (which uses exchange lines provided by Telstra) will be exempt from any charge.

As part of its proposal, Telstra has made certain additional commitments. Telstra will conduct an independent audit of revenue generated by the charge after 12 months to determine whether additional revenue from that expected is generated. If so, this will be returned to customers in the form of a further rebate leading to an additional reduction in the following years line rental. Telstra has also committed that, within 12 months of the implementation of this proposal, it will be answering 90 per cent of calls to directory assistance service within 10 seconds.

Telstra states that currently this is running at about 76 per cent. As well, Telstra has undertaken that it will introduce a range of other measures to improve customers accessibility to and ease of use of alternative directory information services. This includes a review of the useability of the White PagesTM directory, access to alternative enhanced products, directory CD ROMs and White PagesTM on the Internet.

A summary of Telstras proposal is attached.

Issues for comment

The ACCC has less than 30 (calendar) days to submit a report to the Minister on whether Telstras proposal should be disallowed in the public interest. In such a short time-frame it will not be possible for the ACCC to conduct an extensive or detailed analysis of the proposal or to evaluate in detail the apparently extensive and lengthy consultation process that Telstra undertook with many consumer, industry and business groups in developing the proposal, particularly in relation to the system of exemptions which are being proposed.

It is important therefore that consideration of the key issues is focussed as much as possible. The commission will be giving particular regard to the following issues:

Claims that discretionary use now dominates the use of directory assistance service and that this needs to be checked The user pays principle should apply in relation to such discretionary use and so a charge should be established. The reasonableness of a 50c charge The proposed reduction of $5.40 in the annual line rental charge to ensure the proposal is revenue neutral in the first year of implementation, but with no further changes to the rental to reflect any further revenue growth in subsequent years. The claims that more than eight out of 10 people will be better off or not affected as a result of this proposal.

The Commission particularly seeks comment on the following: The adequacy of the proposed system of exemptions relating to those who cannot see, read or hold the printed directory and the detailed procedures associated with its administration, in particular:

whether the proposed system for identifying and dealing with those who have difficulties in using a printed directory is considered appropriate; whether the procedures for administering the system of exemptions, including the application and ongoing consultation processes, are adequate and have sufficient regard for the circumstances of individuals who may be in the eligible categories.

Process for consultation

The extremely limited period for considering this proposal means only a very brief period for comments is possible. The ACCC understands that Telstra consulted widely in developing their proposal and it is neither possible nor desirable for the ACCC to try and replicate this process.

Instead, the ACCC considers a much more targeted programme for consultation would be appropriate and intends to meet with groups of representative organisations over the next 10 to 12 days to discuss their views in response to the Telstra proposal. This is an opportunity for groups and individuals to present their submissions and provide, either at the same time or shortly thereafter their written responses. Written comments should be sent, faxed or e-mailed to the Commission (at the following address) no later than 18 July 1997.

Contact details: Please address all correspondence to: Mr Chris Pattas Directory Assistance Inquiry Australian Competition and Consumer Commission GPO Box 520J Melbourne VIC 3001 Fax no. 9663 3699 or e-mail to: telco013@accc.gov.au