ACCC issues new regulatory accounting framework for the telecommunications industry

The Australian Competition and Consumer Commission today issued the Telecommunications Industry Regulatory Accounting Framework setting out new financial record-keeping and reporting rules for the telecommunications industry.

These record-keeping rules replace the current regulatory accounting framework developed by AUSTEL in the early 1990s.

The carriers who will report under the regulatory accounting framework are Telstra, Cable & Wireless Optus, Vodafone - which reported under the previous regime - and AAPT and Primus, which will be reporting for the first time.

"The new rules will improve the transparency and integrity of the information provided to the ACCC", ACCC Chairman, Professor Allan Fels, said today. "This will assist its decision-making when investigating anti-competitive practices and arbitrating access disputes. Information should also be an important input into many of the ACCC's other regulatory functions, such as its annual reports on telecommunications charges and into inquiries into the scope of regulation".

Telstra and Cable & Wireless Optus will be required to report fully under the new regime, which includes reporting on retail, internal wholesale (supply to its retail level) and external wholesale (supply to other service providers) assets; revenue; costs; and service usage".

AAPT, Primus and Vodafone will be required to report on revenue; cost; assets; and services usage at the retail level and external wholesale level. In the case of AAPT and Primus, this approach is due to the relative size of these carriers and that they are less likely to raise anti-competitive conduct and access arbitration issues. In the case of Vodafone, this is because it essentially provides only one service - the provision of mobile phone services.

Telstra has already submitted its 1999/2000 regulatory financial reports to the ACCC using a draft version of the rules.

"The ACCC acknowledges the work Telstra has done to date preparing for the new rules", Professor Fels said.

ACCC will work constructively with all reporting carriers during the next financial year to assist them to implement the new rules for the upcoming financial year.

Background

Under section 151BU of the Trade Practices Act 1974, the ACCC has the power to establish record-keeping and reporting rules by written instrument and to require that carriers or carriage service providers comply with these rules.

The written instrument containing the new record-keeping and reporting rules for the industry is the Telecommunications Industry Regulatory Accounting Framework (RAF).

The RAF's core reporting requirements are the:

• Capital Adjusted Profit and Loss Statements
  
• Capital Employed Statements
  
• Fixed Asset Statements
  
• Weighted Average Cost of Capital Report
  
• Service Usage Reports

Reporting carriers and carriage service providers are also required to prepare a Regulatory Accounting Procedures Manual (RAPM), which provides a detailed explanation of how the carrier will comply with the RAF. The development of the RAPM will be part of a one-off implementation period for carriers to prepare their accounting systems to provide the regulatory accounts (although it will also require updating from year to year).

The ACCC recognises that it will need to work with those carriers and carriage service providers required to report under the new regime, and expects to be involved in the development of the RAPM, as part of the initial implementation of the RAF. The ACCC also recognises that some flexibility may be required in the application of the Rules to particular circumstances.

The ACCC will provide formal notification to Telstra, Cable & Wireless Optus, Vodafone, AAPT and Primus shortly.