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

The Australian Competition and Consumer Commission today released a draft report on making a final access determination 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 final access determination 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 final access determination to Telstra and not to limit the application to certain geographic regions, thereby applying the final access determination 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 final access determinations will establish a benchmark for Telstra and access seekers to fall back on.”

Draft prices for the wholesale ADSL final access determination 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 final access determination are, overall, somewhat lower than the IAD charges. Both the draft final access determination and IAD prices are below the wholesale prices that the majority of access seekers were paying for the service prior to declaration.

The draft final access determination is proposed to expire on 30 June 2014, the same expiry date as the final access determinations 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 final access determination for the wholesale ADSL service prior to that date.

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

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

Note: The ACCC is proposing not to backdate the final access determination. The IAD prices as listed above will apply until the date when the ACCC makes a final access determination.

Links

Wholesale ADSL service declaration - Wholesale ADSL declaration inquiry 2012

Fixed line services declaration - Fixed network services declaration inquiry

Access determinations for the fixed line services - Fixed line services