The Australian Competition and Consumer Commission today announced its draft decision to remove current access regulation on Telstra and other carriers supplying wholesale local calls in the Central Business Districts of Sydney, Melbourne, Brisbane, Adelaide and Perth.
However in order to provide users of the services with time to adjust to any potential changes, the removal of regulation will not take effect until one year after any final decision is made.
The local carriage service is supplied predominantly by Telstra over its fixed line network and is used by access seekers to offer retail local calls to their customers in the absence of a direct customer connection.
"The ACCC's draft decision is based on evidence that in the specified CBD areas enough alternative facilities have developed to ensure competition in the provision of local call services on a wholesale and retail basis without the need for regulation", ACCC Chairman, Professor Allan Fels, said today.
In making its draft decision, the ACCC took into account the existence of extensive fibre optic and wireless infrastructure in the specified CBD areas, as detailed in an audit of telecommunications infrastructure in Australia recently carried out for the ACCC by BIS Shrapnel. Further details are provided in Attachment A.
"The draft decision indicates that the ACCC will not continue to regulate where regulation is not necessary. In making this decision, the ACCC is displaying its willingness to be flexible in response to market developments by removing regulation in areas where it considers regulation is no longer appropriate".
The draft decision would not change the existing regulation in areas other than those specified. In particular, any final decision by the ACCC will only effect regulation in the specified CBD areas where the vast majority of consumers are business customers. Importantly, it does not affect regulation in metropolitan areas, or rural and regional Australia, which are largely composed of residential customers. The ACCC believes regulation of the local carriage service in areas other than CBD areas is likely to be necessary into the foreseeable future.
"Telstra indicated to the ACCC during the exemption inquiry that it would continue to offer the local carriage service to access seekers. The ACCC is satisfied that in the absence of regulation, competitive market forces will ensure that access seekers have access to Telstra's service on reasonable terms. Notwithstanding, Telstra's pricing of the service would still be subject to the anti-competitive conduct provisions.
"When it declared the local carriage service in July 1999, the ACCC expressed the view declaration would serve to facilitate market entry by enabling Telstra's competitors to build a customer base quickly and reduce the risks associated with infrastructure investment. The ACCC considers that the growth of alternative infrastructure in the specified CBD areas over the past two years means that this rationale has become largely redundant in these areas", Professor Fels said.
The ACCC has issued a Draft Report detailing its decision and seeks comments from interested parties by Friday 12 October 2001. The ACCC will then finalise the report after considering any submissions made to the draft report.