ACCC, Telstra back price stability for copper services

NBN rollout makes regulation of copper services less important, ACCC says

Telcos that sell voice and broadband services using Telstra’s copper network look unlikely to get a price cut, with the Australian Competition and Consumer Commission (ACCC) saying it’s inclined to maintain the current regulated pricing levels.

The ACCC oversees the price and non-price conditions of a number of copper-based wholesale services. The services cover network access, resale and voice interconnection services as well as Telstra’s wholesale ADSL service.

In February 2017 the ACCC said it would continue overseeing the ADSL service for another half-decade and then in November 2018 announced it intended to continue regulating the six other services.

Late last year it launched the current inquiry into the pricing and other conditions for the collection of services including wholesale ADSL.

Regulation of the Unconditioned Local Loop Service (ULLS), Line Sharing Service (LSS), Wholesale Line Rental (WLR), Local Carriage Service (LCS), Fixed Originating Access Service (FOAS) and Fixed Terminating Access Service (FTAS) has been extended until 30 June 2024. The wholesale ADSL service will be regulated until 13 February 2022.

The conditions under which telcos can gain access to the services are covered by so-called final access determinations (FADs). The current FADs all expire on 30 June 2019.

The ACCC today released a consultation and position paper outlining its preliminary views on new FADs.

The rollout of the National Broadband Network (NBN) is expected to be completed in 2020, and although that means that in most parts of Australia Telstra will be shutting down its legacy network, it will continue to deliver copper services in places where NBN Co only offers fixed wireless or satellite connections.

The ACCC said that its preliminary view is that it “favours the continuation of existing prices” for the copper services, with those prices to last for a further half decade.

“The ACCC’s proposed approach is to maintain existing price relativities for the declared services,” the paper states. “In reaching this position, the ACCC has balanced the benefits of stability in relative prices with the potential short-term efficiency losses from prices diverging from their underlying costs [to Telstra] in order to produce an outcome that will promote the LTIE [long-term interests of end users].”

It adds: “The ACCC considers any efficiency losses as a consequence of not allowing price relativities to move with the cost relativities will be of relatively short duration. Furthermore, it considers that the benefits of stability in relative prices in promoting competition in the lead up to the completion of the NBN rollout are likely to outweigh any efficiency losses.”

Last year Telstra indicated to the ACCC that in its view that although price increases would be in line with previous decisions by the competition regulator, Telstra would not push for a change.

“Today the relevance and importance of the legacy copper network for competition and telecommunications services in Australia is fast diminishing as the rollout of the National Broadband Network (NBN) nears completion — the vast majority of Australian consumers will soon have access to the NBN,” a submission from Telstra said.

“In this environment Australian end users would be best served by an expedited and simple FAD process which provides price stability and certainty. This would ensure that end users that remain on the legacy network receive price protection.”

Disagreements about pricing for wholesale services previously led to Telstra dragging the ACCC to court — a case that the telco lost.

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Tags TelstraNetworkingTelecommunicationsAustralian Competition and Consumer Commission (ACCC)

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