ACCC launches consultation on pricing for Telstra's fixed line and transmission services

24 Jul 2014

The Australian Competition and Consumer Commission (ACCC) has published a discussion paper seeking views on setting primary prices for the regulated fixed line services supplied using fixed line incumbent Telstra’s copper network. This consultation forms part of the regulator’s inquiry into making final access determinations (FADs) for the seven regulated fixed line services, those being: unconditioned local loop (ULL), Line Sharing Service (LSS), PSTN Originating Access (OA), PSTN Terminating Access (TA), Local Carriage Service (LCS) and wholesale line rental (WLR).

With the regulator using a building block pricing method to set primary prices for the regulated fixed line services, it confirmed it has obtained expenditure and demand forecasts for the next five years from Telstra. ACCC commissioner Christina Cifuentes noted: ‘The ACCC is seeking views on several complex pricing issues it will consider during the FAD inquiry … These issues include an assessment of Telstra’s expenditure and demand forecasts, approaches to the allocation of costs to access services, the impacts of declining demand and the impact of Australia’s transition from Telstra’s copper network to the National Broadband Network.’

Submissions on the discussion paper are due by 26 September 2014, following which the ACCC expects to release a draft decision regarding fixed line services FADs for comment in ‘late 2014’, while saying it will ‘consider whether there is a need to consult further before releasing its draft decision’. A final decision, meanwhile, is expected by mid-2015.

Alongside the aforementioned consultation the ACCC has also launched another, separate discussion regarding the primary price terms for the Domestic Transmission Capacity Service (DTCS) to be included in the DTCS FAD. This discussion paper reportedly reviews the domestic benchmarking approach that was used in the 2012 DTCS FAD, which the regulator said it had adopted because prices on competitive DTCS routes provide a good guide to the prices that should prevail on non-competitive (regulated) routes. With regards to this consultation, Ms Cifuentes said: ‘The ACCC is seeking input from stakeholders on a range of issues relevant to the price terms that will apply to the DTCS … In particular, we are interested in views about the continued use of the domestic benchmarking approach and whether there are other suitable methodologies that might be considered in pricing the DTCS.’ Stakeholder responses to this consultation will be accepted until 12 September 2014.