Voice interconnection services access determination inquiry

The ACCC will set the following prices for the voice interconnection services.

The ACCC will implement a glide path for the FTAS and FOAS price to provide additional time for suppliers to transition to efficient costs within the new access determination period.

We have delayed starting the new access determinations until 1 July 2026. This is to provide all operators with sufficient time to adjust their operations in response to the price changes. The new access determinations will expire on 30 June 2029.

The ACCC will include a clause in the access determinations to clarify that the standard access obligations do not require an access provider to act in a way which would cause it to contravene a criminal law or a civil penalty obligation arising under the Competition and Consumer Act 2010 or Telecommunications Act 1997. This is in response to stakeholder concerns that there is a perceived tension between obligations to terminate traffic and scam-related obligations.

However, the ACCC will not include a specific scam-related term. We consider developing detailed guidance on how access providers should comply with scam-disruption obligations could be a risk at this time. This guidance could be inconsistent with obligations being developed in the Scams Prevention Framework.

The ACCC will maintain the existing non-price terms and conditions with minor changes. This will provide consistency in the terms for all 3 voice interconnection services.

Voice interconnection services enable calls to be made between different networks.

The ACCC regulates these services because each network operator, whether fixed or mobile, has exclusive access to subscribers on its network. Without regulation, an operator has incentives to refuse interconnection or set unreasonably high prices to the detriment of consumers and end-users.

Pricing of the voice interconnection services

This is the first time we have priced both fixed and mobile voice interconnection services together, reflecting commitments we made in 2019 and 2020.

There are many networks that provide these services. Rather than calculating the actual cost of providing voice interconnection services for each individual network, we developed a cost model to estimate the forward-looking efficient costs for a hypothetical efficient network operator.

Where we regulate, we are required to have regard to many factors, including whether regulation will promote efficient investment.

Development of a cost model

We engaged Analysys Mason to develop a cost model to estimate the costs of providing the voice interconnection services. This was based on a total long-run incremental cost plus organisational-level costs (TSLRIC+) pricing standard. This approach calculates the forward-looking efficient costs of providing the service by a hypothetical efficient operator.

The model separately calculates the costs of a hypothetical efficient fixed operator and a hypothetical efficient mobile operator in providing fixed and mobile voice interconnection services respectively.

We also conducted multiple rounds of consultations during the inquiry and sought extensive information from operators to inform the development of this cost model.

Decrease in the cost of the fixed voice interconnection services

The costs of fixed voice interconnection services have significantly decreased largely because of technological advancements in fixed voice delivery.

In previous regulatory periods, we priced fixed voice interconnection services using a cost model based on Telstra’s actual network costs including things like telephone exchanges. This is because fixed voice interconnection services used to be provided on the public switched telephone network (PSTN) using circuit-switched technology.

We kept these prices stable during the migration to the National Broadband Network (NBN) to promote price stability. In 2019, we indicated that we would re-examine the pricing approach in the next regulatory period. Please note, the NBN is regulated separately.

Fixed voice services are now largely provided using packet-switching technology over the Internet. Most of the cost to deliver fixed voice interconnection services is now software. Importantly, fixed access network costs are not recovered from fixed voice interconnection services.

Cost differences for the mobile and fixed voice interconnection services

Based on the same pricing methodology, the cost of mobile voice interconnection service is higher than the cost of fixed voice interconnection services because the former includes the costs of the radio access network (such as mobile towers and spectrum). These costs increase if the voice traffic carried by the mobile network increases, and consequently should be recovered through the price of the MTAS.

The cost of fixed access network does not change if the voice traffic carried by the fixed network increases. Due to this, it is not recovered through the prices of the fixed voice interconnection services.