ACCC issues position paper on access pricing principles for non-dominant telephony networks

The Australian Competition and Consumer Commission today issued its pricing principles paper on the pricing principles for access to network services supplied by non-dominant networks.

The paper details the ACCC's views on the appropriate pricing methodology for the supply of declared PSTN terminating and originating services by smaller fixed network carriers. These services are used to provide a range of customer services including local, long distance, and international calls.

The ACCC's paper states that in circumstances where the ACCC is conducting an arbitration or reviewing an undertaking assessment, it is unlikely to set or accept a charge for a service that was higher than the efficient cost incurred by Telstra for the supply of an analogous service.

This approach in effect imposes a price ceiling in negotiations for the supply of PSTN originating and terminating services by a smaller or non-dominant fixed network equal to the efficient costs incurred by Telstra, as may be determined by the ACCC. The ACCC may consider the costs of the smaller network if these are shown to be significantly below those of the larger network. However, in doing so the ACCC will recognise the need for encouraging and rewarding efficient facilities-based entry.

The ACCC's pricing principles aim to ensure that outcomes promote efficient competition by encouraging efficient use and investment in infrastructure and are therefore in the long-term interest of end users.

Background

Under Part XIC of the Trade Practices Act 1974, the ACCC is responsible for arbitrating disputes about access to particular 'declared' services. These services are generally inputs used by service providers to supply end-to-end telecommunications services and/or content services.

The PSTN Originating and Terminating Access Services (declared PSTN services) are two such declared services. The declared PSTN services are provided by means of fixed line networks. They are primarily used by carriers and service providers to carry long-distance calls (both national and international) from customers connected to an alternative access network, but who are pre-selected to or use the override code of the access seeker.

The Terminating Access Service is also used to terminate local calls from one network to another. Unless otherwise exempted from the application of standard access obligations, these declared PSTN services include the supply of originating and terminating access service by non-dominant networks (ie non-Telstra networks).

The ACCC received notice of a number of access disputes relating to declared PSTN services of non-dominant networks. Consequently the ACCC is required to determine the terms and conditions (including price) of these services. An issue common to these arbitrations is the price at which the declared PSTN services (of non-dominant networks) are to be supplied.

In December 1999, the ACCC released a paper looking at possible approaches for the regulation of declared PSTN services of non-dominant networks. Following comments made by interested parties, the ACCC issued the draft position paper on pricing principles in August 2000. Today's pricing principles paper follows the ACCC's assessment of further submissions made by interested parties in response to the draft position paper.