ACCC opens up Telstra's local network: lower prices and new high-speed services

22 July 1999

The Australian Competition and Consumer Commission will mandate access to Telstras local network, the last part of Telstras original network monopoly, allowing competitors direct access to its copper lines that connect customers to local telephone exchanges.

"Telstras competitors will be able to provide local and long-distance as well as advanced high-speed services to customers at lower prices, " ACCC Chairman, Professor Allan Fels, said today. "The decision has large implications not only in the short-term for the provision of local calls, but for the emerging high-band width services on which e-commerce, education and entertainment will increasingly rely into the next decade.

"Such services include: access to the Internet, tele-working, distance learning, video-on-demand and other multi-media and data applications at speeds many times faster than that possible by todays analogue modems, and at prices lower than if these were provided or controlled by a single supplier.

"In the ACCCs view, without this decision, it is unlikely that such services would have been made available on a reasonable commercial basis. Competitors would be overly dependent on Telstras choice of technologies, platforms, service processes and timing". In other words, it is vital that new technologies and services are not driven by monopoly control of the local network since competition by a wide range of players provides a superior way of meeting the new telecommunications needs of consumers and businesses.

Todays decision will also enable competitors to have direct access to carriers local exchanges. The decision also guarantees the availability of local calls wholesale (resale) services to other carriers. This will encourage lower prices for local and long-distance services and enable Telstras competitors to provide these services to customers on a single bill.

The decision confirms the ACCCs draft declaration decision of December 1998.

"The declaration of local call wholesale services will ensure service providers will continue to obtain discounts that are likely to increase over time, thus reducing local call prices," Professor Fels said.

"While the extent of price declines cannot be predicted exactly, the ACCC expects that based on todays decision, local call prices will begin falling over the course of the next year. Within two years it is expected local call prices will generally be below 20 cents.

"As competitors deploy new technology in conjunction with new services to provide local calls, the continued need for the separate declaration of this wholesale service should diminish.

"As a result of this decision, the benefits of new high speed services will occur more quickly and across a broader customer and geographic base, particularly for residential and small business users outside of CBD areas" Professor Fels said. "While competitors will need to invest in new network facilities and technologies, they can use the existing customer access lines rather than having to roll out their own cables before being able to compete for local and new advanced services.

"Whilst the decision about local call resale has immediate effects, todays decision to open up the local network is only the beginning. It will be necessary to establish appropriate standards, procedures and rules about how services are to be provided and how access and interconnection is to occur.

"This requires dealing with a number of technical and operational issues which are currently being progressed through various industry processes, being managed by the Australian Communications Industry Forum and the Telecommunications Access Forum. This means access to the copper lines cannot occur until these processes are complete.

"The ACCC strongly supports this work and proposes to maintain an on-going role in these processes. The ability of the industry to complete this work in a timely and satisfactory manner will be an important test of the effectiveness of self-regulation.

"It will be challenging for those involved. However, the ACCC would encourage the industry to work through these issues in a mature and pragmatic manner.

"Significant work must be done to progress relevant issues. The timing of its completion will have a major bearing on how long end users must wait to enjoy the new services benefits. The ability and timing of the industry to address the relevant issues will also be relevant to next years review of the regulatory scheme.

"The ACCC has significant powers to ensure that declared services are supplied effectively and on a timely basis to ensure that consumers gain the full benefits of competition".

The ACCCs Final report to its local access inquiry on whether to declare certain local telecommunications services will be available on its web-site (www.accc.gov.au). The report details the ACCCs findings of why declaration of the specified services would be in the long-term interests of end users and includes service descriptions of each of the services that are being declared. After the reports publication, the ACCC will gazette relevant instruments of declaration specifying the four services being declared as a result of its inquiry.

An attachment to this release provides further background information on the ACCC Inquiry and a summary of the ACCCs findings.

Release number: 
MR 130/98
ACCC Infocentre: 

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