ACCC finalises inquiry into regulation of fixed line services

17 April 2014

The Australian Competition and Consumer Commission (ACCC) today released its final report into the regulation of fixed line telecommunications services. It has decided to continue regulating wholesale services supplied using Telstra’s copper network for another five years.

Fixed line services enable retail telecommunications service providers to use Telstra’s copper network and other fixed line infrastructure to provide a range of retail fixed line telephone and broadband services to Australian consumers. The ACCC will continue regulating the six fixed line services until 2019. The current declarations for the existing six fixed line services expire on 31 July 2014.

“Regulating these services has promoted competition over bottleneck infrastructure. This has been fundamental to the development of competition in retail voice and broadband markets, which benefits Australian consumers,” ACCC Chairman Rod Sims said.

“For example, competition among retail broadband service providers has led to increased data allowances in recent years and a fall in the effective price per GB from approximately $30/GB in 2007 to less than $1/GB today.”

“The ACCC’s decision to continue regulating the wholesale fixed line services will support continuing competition and efficient investment.”

The ACCC has made some adjustments to the scope of regulation to ensure that regulation is only applied where it is necessary to promote effective competition. The ACCC has clarified that resale voice services provided using the National Broadband Network (NBN) are not regulated. It has decided to regulate resale voice services supplied in CBD areas where infrastructure-based competition has proven not to be sufficiently effective.

On 11 July 2013, the ACCC commenced a public inquiry into making new final access determinations (FADs) for the regulated fixed line services and the wholesale ADSL service (FAD inquiry). The FAD inquiry will determine the terms and conditions, including price, for these services where commercial negotiations have not resulted in agreement between the parties.

Due to the number and complexity of the pricing issues, the ACCC intends to undertake extensive consultation with industry during its inquiry. The ACCC expects that this will take most of the coming financial year. The ACCC will not therefore be in a position to make the new FADs before the existing FADs expire on 30 June 2014.

The ACCC considers that, while it is conducting its inquiry, regulated prices should continue to be available for these services when commercial negotiations fail. In addition, the ACCC has decided that the competition benefits of regulating resale services in the CBD areas should flow through to consumers as soon as the new declarations take effect (from 1 August 2014).

The ACCC has therefore extended the current fixed line and wholesale ADSL FADs until it makes new FADs. It has also commenced a short inquiry into varying these FADs. The ACCC anticipates completing the variation inquiry in June this year. The ACCC is seeking industry views on its proposals to ensure:

  • the regulated resale prices will apply in CBD areas and
  • a regulated charge will continue to be available for the internal interconnection cable that is required to connect to Telstra’s network.

The ACCC is currently consulting on the arrangements for disclosing certain information on forecast expenditure and demand provided by Telstra for use in estimating prices in the FAD inquiry. After finalising these arrangements, the ACCC will release a discussion paper around mid-2014. This will be followed by a draft FAD for further industry consultation.

More information on the fixed line services and the ACCC’s final report for the declaration inquiry is available on the Fixed Services Review Declaration Inquiry webpage.

Further information on the FAD variation inquiry, including information on how to lodge a submission, is available on the Fixed Services Review FAD Variation Inquiry webpage.

Further information on the ACCC’s FAD inquiry is available at the Final Access Determination Inquiry webpage.

Release number: 
NR 95/14
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