ACCC sets final fixed-line wholesale prices
The Australian Competition and Consumer Commission (ACCC) has finalised wholesale fixed-line access pricing for the next three years, setting a $16.21 monthly fee for telcos to access Telstra's copper network infrastructure in most areas for ADSL services.
The $16.21 monthly fee is for the "unconditional local loop service" (ULLS), which sees Telstra rent the copper line to rival telcos between the exchange and the home. In the exchanges, telcos can then deploy their own DSLAM equipment. The $16.21 charge will cover approximately 957,000 ULLS across Australia; 125 ULLS in the most remote areas of Australia will have a much higher fee of $48.19.
Prior to the new ULLS pricing, there were a number of different monthly rates depending on location: charges would vary from as low as $6.60 per month past the mid-range of $31.30 up to $48 for more remote areas. In March, the regulator set interim prices of $16 in most areas, using what it called a "building block pricing model", or a regulated asset base (RAB) model, which calculates a price based on Telstra's assets and the costs associated with providing the services to its rivals.
Telstra's main rival Optus argued that this calculation overvalued Telstra's copper network assets, and would lead to the telco being overcompensated. Telstra contradicted this, saying that the ACCC's pricing had, in fact, depreciated the value of Telstra's assets.
The prices serve as a benchmark between Telstra and other telcos; however, the two parties can negotiate their own access terms if required. There are also 215 exchanges that are currently exempted from this regulation, where it is considered that competition is strong enough as there are three or more ULLS-based competitors providing services to 14,000 or more customers.
The ACCC is now conducting a review of the exempted exchanges to see if they are meeting their competition requirements. Optus, Internode, Adam and iiNet all complained to the regulator that the exemptions had not encouraged competition in those exchanges, but had instead led to Telstra jacking up prices.
The ACCC originally sought to lock in the ULLS prices for the next five years; however, after industry consultation, it arrived at the conclusion that with the impending roll-out of the National Broadband Network (NBN), a three-year period would be better suited, starting from 1 July 2011 until 30 June 2014.
"These measures will promote certainty and predictability in the way the ACCC will calculate prices for these services for the next ten years," ACCC chair Graeme Samuel said in a statement.
Updated at 5:37pm, 21 July 2011: Clarified the number of ULLS.