ACCC to reject Telstra ULLS proposal

update Telstra's proposal to charge its telco customers across Australia AU$30 per month for access to its unconditioned local loop service (ULLS) is set to be rejected by the Australian Competition and Consumer Commission (ACCC). The ACCC issued its draft decision today on the proposal, which saw Telstra average the different cost estimates for providing ULLS access across the country into one monthly charge.

update Telstra's proposal to charge its telco customers across Australia AU$30 per month for access to its unconditioned local loop service (ULLS) is set to be rejected by the Australian Competition and Consumer Commission (ACCC).

The ACCC issued its draft decision today on the proposal, which saw Telstra average the different cost estimates for providing ULLS access across the country into one monthly charge.

"The ACCC considers that Telstra's proposed monthly charges for the ULLS are not reasonable," said ACCC chairman Graeme Samuel.

"The ACCC believes that Telstra's proposed average price is unlikely to promote competition on its merits and likely to heavily distort the use of and investment in telecommunications infrastructure.

"Telstra's prices also adopt a proposed method of cost recovery for ULLS specific costs which has now been rejected by the Australian Competition Tribunal following Telstra's appeal on its undertaking for the Line Sharing Service".

The ACCC said it was also concerned about the carrier's PIEII cost model, used in its cost estimates.

The model was likely to overstate costs in rural areas and thereby produce a higher average charge for the service than is likely to be efficient, according to the ACCC.

But Telstra said the ACCC's draft decision was "an assault on the basic principle of equal prices for all Australians".

In e-mailed statement, a spokesperson for the company said the ACCC's move would "allow Telstra's foreign and domestic competitors to raid the savings of Telstra's 1.6 million shareholders".

"It is illogical and unfair to allow competitors to piggyback on the Telstra network, cherrypick in profitable metro areas and multiply the profits they send overseas at the expense of Australian shareholders and customers," concluded the spokesperson.

But the telco's largest competitor Optus had a different view, welcoming the announcement.

"This draft decision is the final nail in the coffin for Telstra's push for averaged pricing," an Optus spokesperson told ZDNet Australia via e-mail this afternoon.

The spokesperson pointed out Telstra's proposal had "completely" reversed what they described as "Telstra's long-standing position which supported different prices for ULLS in four different zones."

"Telstra's 'average ULLS charge' position was little more than a stunt designed to delay the regulatory process," the Optus spokesperson continued.

"As today's ACCC decision shows, it was inconsistent with well established regulatory principles requiring access prices to be based on cost, plus reasonable return on investment. Optus will of course make a submission to the ACCC supporting its draft decision."

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