ACCC declares line sharing

The Australian Competition and Consumer Commission today announced its final decision to declare the telecommunications service known as 'line sharing' or 'spectrum sharing'.

The decision means Telstra must allow other service providers access to the high-speed data capacity of its copper network on commercial terms. The ACCC will have jurisdiction to arbitrate if parties are unable to reach agreement on the terms of access.

ACCC Chairman, Professor Allan Fels, said the decision to declare the service was based on concerns about the viability of sustained competition in broadband telecommunications markets if the service was not declared.

"Line sharing allows one telecommunications carrier to provide broadband services while another provides voice services on the same telephone line at the same time", he said.

"This gives broadband providers the freedom to focus on providing high-speed data services to consumers, such as the Internet, video-on-demand, and other multi-media applications.

"Consumers will benefit as they will have access to more competitive and innovative broadband service offerings at lower prices".

Professor Fels said that in reaching its decision, the ACCC recognised that Telstra had already reached some commercially negotiated agreements, but had also taken into account difficulties that were continuing to be experienced by some substantial access seekers.

"The majority of submissions received by the ACCC in response to our draft decision supported the decision to declare the service", he said.

"This will bring Australia into line with other overseas markets such as the United States and the European Union countries, which have previously moved to regulate line sharing services".

Professor Fels said the ACCC was particularly concerned that Telstra faces no real competition in the supply of the line sharing service. This generates unequal bargaining power between parties in commercial negotiations, which declaration seeks to redress.

"The ACCC believes it is crucial that new technologies and services are not driven by monopoly control of the local network, since competition by a wide range of players provides a superior way of meeting the new telecommunications needs of consumers and businesses", he said.

Professor Fels emphasised the decision to declare the service would not necessarily lead to intervention by the ACCC in determining terms and conditions for the service. To assist in this regard, the Final Report issued with today's decision seeks to give industry further guidance on what the ACCC considers to be appropriate principles for determining prices for a line sharing service.

"It is particularly important to recognise that so long as Telstra continues to recover the cost of its copper network through other avenues, the price of the line sharing service should not vary across different geographical regions", Professor Fels said.

"The ACCC therefore sees no reason why the price of this service should be any greater in rural and regional areas than in metropolitan areas.

"Inevitably, the appropriate terms and conditions of access for a line sharing service will be heavily dependent on future demand for this service".

The ACCC is also concerned to see that access seekers receive the service as soon as practically possible.

"The ACCC will closely examine any delays in the provision of the service to ensure they are not anti-competitive in nature,” Professor Fels said.

Background

Part XIC of the Trade Practices Act 1974 establishes a process whereby providers of telecommunications services can obtain access to particular (input) services. There is no general right of access to such services. Rather, the ACCC must first declare (that is, decide to regulate) the service. The ACCC can declare a service, or vary/revoke an existing declared service, on the recommendation of industry or after the ACCC undertakes a public inquiry process and decides the declaration will promote the long-term interests of end-users of telecommunications services. The ACCC can revoke or vary a declaration where it is no longer satisfied that the existing declaration is in the long-term interests of end-users. In assessing whether declaration, revocation or variation to an existing declaration will promote the long-term interests of end-users, the ACCC must have regard to the objectives of:

• achieving any-to-any connectivity (that is, ensuring end-users of different networks can communicate)

• promoting competition in telecommunications markets

• encouraging the economically efficient use of, and investment in, infrastructure.