ACCC outline interim determination for wholesale ADSL service

14 Feb 2012

The Australian Competition and Consumer Commission (ACCC) has declared wholesale ADSL services under section 152AL of the Competition and Consumer Act 2010. In announcing its decision, the regulator has argued that the move will ‘promote the long-term interests of end-users of fixed line broadband internet services throughout Australia’. In its ruling the ACCC noted that fixed line incumbent Telstra continues to hold a dominant position in the markets for both retail and wholesale fixed line broadband services. Further, the watchdog argued that despite the deployment of alternative broadband infrastructure in some areas around the country over the last ten years, competition in the supply of ADSL remains ineffective.

As part of the interim access determination – which will apply for one year from the date of its announcement – Telstra will now be required to allow alternative operators access to its infrastructure, with the cost of access set down by the ACCC. Looking ahead, meanwhile, the regulator has also revealed that it had launched an inquiry aimed at reaching a final access determination for wholesale ADSL services. It noted that the investigation will consider a number of elements, including: the appropriate structure and level of pricing for the wholesale ADSL service; which terms of access should be addressed in the final access determination, and how these terms should be addressed; and whether the final access determination should limit the application of the declaration to certain providers or to certain geographic regions. Interested parties have been invited to make submissions regarding the final access determination by 30 March 2012.

In terms of the pricing that will apply for the next twelve-month period, the ACCC said it had adopted Telstra’s current wholesale pricing construct, with prices set using a Retail Minus Retail Cost methodology; this calculates wholesale rates based on Telstra’s retail prices minus the costs that it incurs in transforming network access into retail services. The key price terms for the monthly per-user access charge and the monthly charge for data aggregation (which relates to data usage) have been set as: AUD25.40 (USD27.26) per month per end-user in Zone 1 (predominantly CBD and metropolitan areas); AUD30.80 per month per end-user in Zone 2/3 (predominantly regional and rural areas); and a monthly charge per Aggregating Virtual Circuit or Virtual LAN acquired in connection with wholesale ADSL of AUD45.50 per Mbps until 30 June 2012, and AUD33.65 thereafter.

Commenting on the development, ACCC acting chairman Michael Schaper said: ‘As a result of these decisions, end-users can expect to have access to a greater range of competitive fixed line broadband internet service offerings.’