ACCC proposes cost-based prices for wholesale broadband services on Telstra’s copper network

12 March 2013

The Australian Competition and Consumer Commission today released a draft report on making a final access determination (FAD) for the declared wholesale ADSL service. The service is used by retail telecommunications service providers to provide broadband internet products to consumers and businesses over Telstra’s copper network.

The draft FAD sets out proposed price and non-price terms for the declared wholesale ADSL service to apply until 30 June 2014. The ACCC proposes to limit the application of the FAD to Telstra and not to limit the application of the FAD to certain geographic regions, thereby applying the FAD nationally.

Telstra currently retains dominant positions in the markets for both retail and wholesale fixed-line broadband services despite the deployment of competitive broadband infrastructure in some areas over the past decade.

“Setting regulated prices for access to Telstra’s wholesale ADSL service will assist access seekers to offer a range of competitive fixed-line broadband internet services to retail broadband users,” ACCC Chairman Rod Sims said.

“While access seekers and Telstra will still be able to negotiate their own terms and conditions of access, the FADs will establish a benchmark for Telstra and access seekers to fall back on.”

Draft prices for the wholesale ADSL FAD have been calculated using the same Building Block pricing framework used to estimate prices for the other declared fixed-line services provided over Telstra’s copper network. Using the same pricing approach ensures consistency in the way prices have been set for services that are provided using many of the same infrastructure assets.

“The proposed decision will foster competition in retail fixed-line broadband markets and maintain efficient investment incentives in the transition to the National Broadband Network,” Mr Sims said.

In February 2012, the ACCC declared the wholesale ADSL service and simultaneously released an interim access determination (IAD), which resulted in prices for the wholesale ADSL service being regulated for the first time. The interim prices in the IAD were established using a retail-minus approach and offered the majority of access seekers the opportunity to obtain the wholesale ADSL service from Telstra for a lower price.

The cost-based prices included in the draft FAD are, overall, somewhat lower than the IAD charges. Both the draft FAD and IAD prices are below the wholesale prices that the majority of access seekers were paying for the service prior to declaration.

The draft FAD is proposed to expire on 30 June 2014, the same expiry date as the FADs for the other declared fixed line services. This will allow the ACCC to review the price and non-price terms for the wholesale ADSL and other declared fixed line services at the same time.

The inquiry period for the wholesale ADSL inquiry was recently extended to 13 August 2013, but the ACCC expects to release its final decision on the FAD for the wholesale ADSL service prior to that date.

The ACCC invites all interested parties to make submissions on the draft report and draft FAD by 5 April 2013.

The draft decision, draft FAD and a short guide to the wholesale ADSL service (including prices) will be available on the ACCC site.

Draft FAD prices for wholesale ADSL

 

 

Draft prices for  wholesale ADSL

IAD prices for wholesale ADSL from 1 July 2012

IAD prices for wholesale ADSL to 30 June 2012

Monthly port charge per end-user in Zone 1

(predominantly CBD and metropolitan areas)

$24.56

$25.40

$25.40

Monthly port charge per end-user in Zone 2/3

(predominantly regional and rural areas)

$29.81

$30.80

$30.80

Monthly charge per Aggregating Virtual Circuit or Virtual LAN acquired in connection with wholesale ADSL

$36.08 per Mbps

$33.65 per Mbps

$45.50 per Mbps

Note: The ACCC is proposing not to backdate the FAD. The IAD prices as listed above will apply until the date when the ACCC makes an FAD.

Links

Wholesale ADSL service declaration - http://transition.accc.gov.au/content/index.phtml/itemId/1022756

Fixed line services declaration - http://transition.accc.gov.au/content/index.phtml/itemId/719844

Access determinations for the fixed line services - http://transition.accc.gov.au/content/index.phtml/itemId/990530

Release number: 
50-13
Media enquiries: 
Mr Duncan Harrod - (02) 6243 1108 or 0408 995 408
Additional contacts: 
General Inquiries: 1300 302 502

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