ACCC draft fixed line services decision revises access prices

ACCC draft fixed line services decision revises access prices

Sees a one-off uniform fall in access prices of 9.6 per cent

ACCC draft fixed line services decision revises access prices

ACCC draft fixed line services decision revises access prices

The Australian Competition and Consumer Commission (ACCC) has released a further draft decision on the prices other operators will have to pay to use Telstra’s copper network in the provision of telecommunications services to consumers.

This draft follows the ACCC’s draft decision in March this year, to address outstanding issues.

The further draft decision sees the requirement for a one-off uniform fall in access prices of 9.6 per cent for the seven access services.

This revises the 0.7 per cent fall estimated in the March draft decision, which was an interim figure and subject to the ACCC considering these outstanding issues. As a result, this new price will apply from October 1 through to June 30, 2019.

The ACCC issued a statement, which stated that the most important issue for the draft decision on prices is the effect of the transition from Telstra’s fixed line network to the nbn.

In the statement, ACCC chairman, Rod Sims, said the nbn is replacing Telstra’s legacy network as the infrastructure over which Australians receive fixed line voice and broadband communications, and as services are disconnected from the legacy network, some assets become redundant and the efficiencies of servicing large numbers of customers are progressively lost.

As such, he indicated that users of Telstra’s network should not pay the higher costs that result from fewer customers as nbn migration occurs.

“If there is no adjustment for these higher costs then customers who have not been migrated to the nbn will pay significantly higher prices for copper based services. Eventually these prices would reach absurd levels for the unlucky last copper customers,” he said.

In addition, assets that become redundant as a result of migration will be removed from the asset base. Also, users of the copper network will not pay the higher prices that result from the loss of scale efficiencies as the number of services remaining on the copper network falls.

Read more: Deal to accelerate nbn rollout approved

Other outstanding issues which the ACCC has now included in the draft decision are the ACCC’s views on Telstra’s efficient costs and its proposed cost allocation framework. On the first of these issues, Telstra has provided significantly more information on its operating and capital expenditures and has also revised its forecasts.

“The ACCC’s draft decision will now accept Telstra’s latest expenditure forecasts subject to the exclusion of the capital and operating expenditures that are specific to the NBN and which should not be recovered from users of the copper network,” Sims claimed.

On the cost allocation framework to be used to determine prices, the ACCC maintains its position to adopt the fully allocated framework proposed by Telstra. The ACCC has obtained expert advice on the methods and inputs that Telstra has used in developing the framework, and will make some adjustments to cost allocations based on that advice.

The ACCC invites stakeholder views on this further draft decision on the primary price terms to be included in the final access determinations for the next regulatory period. Submissions are due on July 17 and it intends to release the final decision at the end of September.

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Tags TelstraTelecommunicationsASXacccpricing

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