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ACCC backtracks on Telstra ULLS pricing

In the face of industry-wide criticism, the Australian Competition and Consumer Commission (ACCC) has reverted to its old pricing schedule and released a discussion paper on how it should value Telstra's network in the future.
Written by Liam Tung, Contributing Writer on

In the face of industry-wide criticism, the Australian Competition and Consumer Commission (ACCC) has reverted to its old pricing schedule and released a discussion paper on how it should value Telstra's network in the future.

"Industry continues to raise issues regarding the revaluation and hypothetical optimisation of existing network assets which are key to the current pricing principles, and a review is likely to be well accepted by the sector. It will draw a line in the sand and address the pricing principles afresh for the new environment," ACCC chairman Graeme Samuel said in a statement today.

The prices the ACCC sets are critical to the sector since it uses them in the determination of ongoing disputes between Telstra and its carrier customers.

In August, the ACCC had proposed a two-tiered (rather than four-tiered) pricing system for Telstra's unbundled local loop service (ULLS), which is used by carriers which install their own broadband and telephony equipment at Telstra's exchanges. The ACCC's plans drew the ire of carriers that had installed this equipment, in part because the new pricing schedule attempted to slim down the pricing difference for ULLS and straight wholesale access, which allows a carrier to simply resell Telstra's services.

While the ACCC today said it would retain its "four band" pricing until December 2010, it has culled the fourth category which covered the most remote areas. The three bands for Telstra's ULLS will be $6.60 per month for band 1 (CBD) services, $16 per month for band 2 (metro), and $31.30 a month for band 3 (regional) services. In contrast, Telstra has argued for metro ULL pricing to be around $30 per month. Pricing the ACCC released in August proposed a jump in this category from $16.90 to $20, partly meeting Telstra's wishes.

The pricing principals overseen by the ACCC may become even more critical should the government's Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill be passed in February 2010 since it has proposed regulator's powers should be boosted so that it can set binding pricing, which may help it avoid downstream litigation common to the industry in the past decade.

Responses to its discussion paper are due by 26 February 2010.

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