The Australian Competition and Consumers Commission (ACCC) has refined its wholesale fixed-line pricing plans after feedback from the telco industry.
In April, the consumer watchdog began a public consultation on overhauling the current wholesale pricing model. The aim was to soften Telstra’s dominance in the wholesale market as the National Broadband Network (NBN) is progressively rolled-out.
In a draft proposal by the ACCC, Telstra would charge access seekers a flat rate of $16 per month to use its exchanges for voice and ADSL2+ services, which is called an unconditional local loop service (ULLS) across most of Australia. Previously the cost varied from $6.60 to $31.30 depending on the location of exchanges. Metropolitan areas were likely to be charged less than rural and remote areas.
The $16 price was later bumped up slightly and was to be set for a five-year period. Remote locations were to be charged $50.11.
A number of telcos, including Optus, Adam Internet, Aussie Broadband, iiNet and Internode raised concerns over the five-year set wholesale pricing period, claming it was “over-ambitious” and recommended a three-year period instead.
ACCC has accepted the suggestion. Final prices have been set at $16.21 for 957,000 and $48.19 for 125 remote area exchanges for a three-year period. Prices can be negotiated between Telstra and third-party access seekers.
There was also some dispute over the ACCC’s evaluation of the regulated asset base (RAB) for Telstra’s fixed-line network, which impacts how the consumer watchdog determined the wholesale prices.
ACCC’s initial RAB value for Telstra assets was $15.9 billion.
Optus argued ACCC’s had inflated the value of Telstra’s assets by more than $1.8 billion above its unrecovered actual costs to achieve the $16 ULLS price. Telstra, on the other hand, claimed the ACCC had undervalued its assets.
AAPT said the $15.9 billion price tag seemed to have omitted payments pending from NBN Co to Telstra for access to its ducts and pits.
ACCC has now set Telstra’s RAB at $15.516 billion.
The next step for the watchdog is to initiate an inquiry into exchanges that have been exempt from regulation. There are around 215 of those and the ACCC needs to determine whether or not they are stifling competition in the telco space and whether or not to remove those exemptions.