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ACCC Release Interim Price & Non-Price Terms for Fixed Line Services Under the New Telecommunications Access Regime

Canberra, Australia (News4us.com) March 04, 2011

ACCC Release Interim Price & Non-Price Terms for Fixed Line Services Under the New Telecommunications Access Regime

ACCC Release Interim Price & Non-Price Terms for Fixed Line Services Under the New Telecommunications Access Regime

The Australian Competition and Consumer Commission has issued interim access determinations (IADs) for fixed line telecommunications services under the new telecommunications access regime, which came into operation on 1 January 2011.

The IADs released today provide interim price and non-price terms for the six declared fixed line services*.

These fixed line services are currently used as inputs by competitive communications companies to provide voice, facsimile and broadband internet products to consumers and businesses over Telstra’s copper network.

“Today marks the first step in implementing the new telecommunications access regime,” ACCC chairman Graeme Samuel said.

“The ACCC has now set interim price and non-price terms for the six fixed line services. While parties are still able to negotiate their own terms and conditions, the interim access determinations establish a benchmark for Telstra and access seekers to fall back on when negotiating terms and conditions.”

The IADs have been backdated to commence on 1 January 2011 and expire on 31 December 2011 or on the introduction of a final access determination (FAD) for that service, whichever is earlier. The ACCC has the power to vary IADs prior to the making of a final access determination for each service.

Prices for the six fixed line services have been derived using the Building Block pricing framework commonly used in other regulated industries.

“It is important to acknowledge the major shift in our approach to pricing these services and that the move to a Building Block model in telecommunications has been widely supported by industry for some time,” Mr Samuel said.

The ACCC has decided to set a single unconditioned local loop (copper access) price of $16 per month for CBD, metropolitan and regional areas (Bands 1 to 3) — the same price previously set for metropolitan areas (Band 2)—to promote industry stability during the transition to the new access regime. Wholesale prices for other services, including Wholesale Line Rental and the Local Carriage Service, have fallen due to assessed lower costs of providing the services and the move away from the previous pricing approach which was based on Telstra’s retail prices for these services.

The ACCC will shortly commence a public inquiry into the making of FADs for the declared fixed line services as required by the new legislation. The ACCC will release its fixed line services pricing model upon commencement of that inquiry.

Along with the IADs, the ACCC is releasing a statement of reasons which outlines the main provisions of the new legislative regime, the pricing methodology used, and other details of the IADs.

The prices for fixed line services and a description of the relevant services are set out below. The IADs and reasons can be found on the ACCC’s website at: www.accc.gov.au/content/index.phtml/itemId/.

*Guide to the declared fixed line services

The IADs are specific to wholesale access to the six declared fixed line services. They do not apply to services provided over fibre.

ULLS – The unconditioned local loop service is the use of the whole copper line from the telephone exchange to the home. By using this service a company can supply telephone and/or ADSL services to consumers using their own equipment in the telephone exchange.

WLR – The wholesale line rental service allows a company to supply voice services to consumers using Telstra’s equipment.

LSS – The line sharing service allows a company to supply ADSL services to consumers using their own equipment in the telephone exchange, while the consumer is able to get their voice service from another provider.

PSTN OA and TA – This refers to both the public switched telephone network originating access and terminating access services. PSTN OA allows a telephone call from a caller to be connected to a point of interconnection within the network of a company that provides telephone services. PSTN TA allows a telephone call to be carried from a point of interconnection within the network of a company that provides telephone services to the party being called. The services together allow a company to connect their customers to customers on other networks.

LCS – The local carriage service allows a company to supply end-to-end voice services to consumers without having to install their own equipment in the telephone exchange. It is generally sold with the WLR so that a company is able to supply a full voice service.

Interim prices for fixed line services

Summary – Previous indicative prices compared with IAD prices to apply from 1 January 2011 to 31 December 2011

For ULLS services, the Bands relate to different geographical areas. The ACCC has set an averaged price for Bands 1 to 3 and has, for the first time, set a price for Band 4. Bands 1-3 cover the CBD, non-CBD metropolitan areas and regional areas, where the majority of Australia’s population lives. The Band 4 price is for the most remote areas. In June 2010, there were only about 144 active ULLS services in Band 4 compared to over 690,000 active ULLS services across Bands 1, 2 and 3.

The ACCC has also set charges for some connection and disconnection services.


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