The ACCC said the Telstra fee was "well above efficient costs."
The LSS is a service that enables two carriers to provide separate services over a single metallic pair or 'line'. It allows Telstra to supply basic telephone services to a consumer while also enabling its competitors to provide high speed broadband services, such as ADSL, to the customer on the same line.
ACCC chairman, Graeme Samuel, said that it was the ACCC's final view that the Telstra's LSS undertaking should be rejected since it was "not reasonable".
"The ACCC has formed a view that the monthly charge of AU$15 per service is not reasonable as it is significantly higher than what would be justified by the efficient costs of supplying the service. Such a price will not promote competition, as it is unlikely to encourage service providers to invest in their own facilities to provide broadband services. It is also unlikely to encourage efficient use and investment in infrastructure by Telstra."
In September 2003, Telstra lodged an access undertaking with the ACCC specifying the terms and conditions upon which it undertakes to meet its standard access obligations to supply the LSS.
The terms and conditions relate to the pricing of the LSS but not to other matters of supply. The undertakings include service descriptions and a price list specifying Telstra's proposed charges for the service outlined in the service description.
The ACCC released a discussion paper on Telstra's LSS access undertaking in December 2003 and consulted interested parties to express views and information on the issue.
The ACCC also sought further information from Telstra on costs and other aspects of the supply of the service to better inform its assessment.