The Australian Competition Tribunal has confirmed there is a case for winding back regulated access to Telstra's wholesale voice services in certain metropolitan and CBD areas, when and where competition has sufficiently developed.
The Tribunal has varied the exemption orders made by the ACCC in August and October 2008 in relation to Telstra's supply of the local carriage service (LCS), wholesale line rental service (WLR) and PSTN originating access service. These services are often acquired together by access seekers to supply voice services to end users.
The local carriage service (LCS) is a wholesale local call service that allows access seekers to resell local calls to end-users. The wholesale line rental (WLR) service involves the provision of a basic line rental service that allows an access seeker to offer a service connecting an end-user to Telstra's PSTN. The PSTN originating access service is a wholesale input for the provision of voice services. The PSTN OA service is used by access seekers to supply a range of voice-grade calls, including international, national long distance and fixed to mobile calls.
In its WLR/LCS decision, the Tribunal noted that: "…competition is likely to be promoted…if deregulation takes place in a market where … an entrant or small current player has taken, or has the physical capacity and willingness to take, market share from the large or dominant incumbent, by offering end-users a better price product-service package."
Like the ACCC's original exemption orders, the Tribunal's orders address a number of common hurdles faced by access seekers in accessing Telstra's underlying network using the Unconditioned Local Loop Service (ULLS).
Under the Tribunal's orders, whether an exemption will apply in a particular area will depend on a number of factors, including the number of Telstra's competitors already using the ULLS in that area as well as their market share. Twice a year, the ACCC will publish on its website a list of geographic areas where the exemptions will apply. No exemptions will come into effect before the end of next year.
The Tribunal also affirmed the ACCC's decision to grant an exemption for the PSTN OA service in five CBD areas subject to a minor variation to the expiry date. The WLR and LCS are not regulated in CBD areas.
The LCS, WLR and PSTN OA services are 'declared' services under Part XIC of the Trade Practices Act 1974. Following the ACCC's decision to 'declare' a service, standard access obligations (SAOs) exist for any carriers or carriage service providers providing that service, whether to themselves or to other persons. The obligations include the requirement that the regulated service must be provided to service providers, along with specified ancillary services, on request.
The declarations of the LCS, WLR and PSTN OA services were extended for five years in July 2009.
A carrier can apply to the ACCC for a written order exempting it from any, or all, of the SAOs that apply to a declared service. In deciding whether to make an order, the ACCC must consider whether it will promote the long-term interests of end-users of the carriage services, or services provided by means of carriage services.
Telstra submitted exemption applications for the LCS, WLR and PSTN OA services in certain areas in 2007. The ACCC issued decisions granting the exemptions, subject to conditions and limitations, in 2008. These decisions were appealed to the Australian Competition Tribunal.
On 22 December 2008, the Tribunal rejected Telstra's applications for exemptions for the WLR and LCS services. Following an appeal by Telstra to the Full Federal Court the WLR and LCS applications were remitted back to the Tribunal for further consideration.
In line with the Tribunal's exemption orders, Telstra is still required to provide access to the LCS, WLR and PSTN OA services in non-exempt areas and in certain circumstances defined by the conditions and limitations contained in the exemption orders.
A copy of the Tribunal's orders will be available on the ACCC's website.