iiNet counters Telstra's push for higher access charges with call for reduction

22 Dec 2014

Alternative Australian operator iiNet has called for a significant cut in fixed line incumbent Telstra’s wholesale access charge, in contrast to the latter’s current drive to actually increase the price it charges rivals for access to its copper infrastructure.

As previously reported by CommsUpdate, in October 2014 Telstra reportedly called for a 7.2% increase in wholesale charges across its fixed line services, with the telco claiming that such a hike is justified as its costs will rise as a result of subscribers moving from its infrastructure to the National Broadband Network (NBN). At the time, and with the call for the price increase made as part of the operator’s submission to the Australian Competition and Consumer Commission’s (ACCC’s) inquiry into pricing for the declared fixed line services, Telstra argued that although it expects reduced fixed line costs as result of customers migrating to the NBN from its copper network, these would be unlikely to offset the decline in demand.

Now, according to the Business Spectator, such claims have been comprehensively rejected by iiNet, which has instead argued that fixed line access charges should be reduced by close to 17%. With the alternative operator having tasked Frontier Economics with calculating charges if the ACCC’s Fixed Line Services Model (FLSM) was rolled forward into the next regulatory period, it has argued that the data it received contradicted Telstra’s assertion that the charge should rise. Indeed, according to Frontier Economics’ estimates, which were reportedly based on Telstra’s own forecast of costs and demand, there should be a one-off reduction in charges of 16.9%, with prices then to be held for the following two years of a three-year regulatory period.

Commenting on the findings, iiNet CEO David Buckingham was cited as saying: ‘The Australian public is tired of the incumbent demanding cost increases for access to their aging copper telephone network, on top of the compensation it will already receive from selling this network to the NBN. … Telstra’s push for an increase in access prices for Declared Services is an attempt to move the goal posts which, if accepted, would lead to a significant and unjustified windfall.’