The Australian Competition and Consumer Commission today flagged a continuing review of whether geographic exemptions from regulation should be included in final access determinations for the declared fixed line services.
In the April 2011 Discussion Paper into making final access determinations for fixed line services the ACCC noted that it would consider the future operation of the exemptions in respect of wholesale line rental, PSTN terminating access and the local carriage service. The ACCC's preliminary view was to incorporate the effect of the previous ordinary and class geographic exemptions made by the Australian Competition Tribunal and the ACCC for these services.
However, the ACCC is concerned that competitive pressures on Telstra in the exempt exchanges may not be living up to expectations at the time of the original exemption decision. The ACCC is also concerned that wholesale service offers in the exempt exchanges may be on substantially less favourable terms than those available in regulated exchanges.
Submissions have raised a wide range of issues, including the implications of the National Broadband Network on investment in, and deployment of, equipment to produce services subject to the geographic exemption and the creation of a competitive market for services such as wholesale line rental.
The ACCC considers the complex issues raised concerning the operation and impact of the exemptions on markets require further investigation. The ACCC will be seeking additional information on market impacts to assist in its consideration of the future of the exemptions.
At the same time, the ACCC is satisfied that it has largely resolved the issue of pricing for declared fixed line services and expects to make a decision within the next four weeks. To ensure price certainty, the ACCC will not delay its decision on this aspect of the final access determination while other issues such as exemptions and non-price terms are under further consideration. The ACCC expects to resolve important non-price issues, including the future operation of exemptions, well before the new exchange service area exemptions take effect on 30 December 2011.
"The impact of the exemptions is significant - in practice, once the exemptions take effect, access seekers can no longer rely on regulated access to the services in these exchange service areas and must commercially agree the terms and conditions of access," ACCC chairman Graeme Samuel said.
"In considering this important issue, we need to gather some additional information on matters such as access seeker investment, alternative supply, and the impact of the NBN".
Revised list of exempt ESAs
On 2 March 2011, the ACCC made interim access determinations for the declared fixed line services which incorporated the effect of the previous ordinary and class exemptions made by the Australian Competition Tribunal and the ACCC, including processes for updating the list of exempt exchange service areas.
Today the ACCC has updated the exempt exchange service area list, in accordance with the interim access determination.
The calculations released today mean that from 30 December 2011, there will be a further 34 exchange service areas in which Telstra will be exempt from the standard access obligations including in relation to the price of access to the relevant declared services.
These new calculations take the total list to 215 exempt exchange service areas. However, the list of 215 exempt exchange service areas is not of itself definitive as certain conditions and limitations must also be satisfied, or the exemptions will not take effect.