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ACCC sets Telstra wholesale ADSL pricing

The competition regulator has pushed down the final prices that Telstra will be allowed to charge its wholesale customers for services on ADSL.
Written by Josh Taylor, Contributor on

The Australian Competition and Consumer Commission said that it decided had to lower the price that Telstra will be able to charge its wholesale customers for ADSL services based on "updated information" received about the cost for Telstra to provide those services.

In February last year, the ACCC declared wholesale ADSL and set interim prices that Telstra could charge access seekers to get services for customers. Wholesale ADSL is generally used by telcos in areas where Telstra's retail competitors, such as iiNet, Internode, and Optus, do not have their own DSLAM infrastructure and are therefore required to wholesale the entire broadband service from Telstra. In these areas, commonly referred to as "off-net" areas, Telstra has been under fire for charging wholesalers more than it charges retail customers through BigPond.

The interim prices were set at AU$25.40 per month for a port in CBD and metro areas, AU$30.80 per month for a port in regional and rural areas, and a monthly aggregating virtual circuit or virtual LAN charge of AU$33.65 per megabit per second (Mbps).

In March, the regulator had suggested that the metro port price would be reduced to AU$24.56 per month, and regional port pricing would be AU$29.81 per month, with an aggregating virtual circuit cost rising to AU$36.08 per Mbps.

Today, the ACCC said it would lower prices even further, down to AU$24.44 for metro ports per month and AU$29.66 per month for regional ports, with an aggregated virtual circuit charge of AU$32.31 per Mbps.

The new prices will now apply until June 30, 2014.

The ACCC said that the final price was still a "cost-based" approach, but was lowered from the March figures due to updated information received about the cost for Telstra to offer the service to other telcos, taking into account the cost of running and maintaining the network.

Despite the lower price, the service is still likely to be seen as too expensive by Telstra's wholesale customers, including iiNet and Optus. In March, iiNet's chief regulatory officer Steve Dalby said in March that the charge was effectively triple the cost for Telstra to offer the service.

The ACCC had also considered, but ultimately abandoned plans to force Telstra to unbundle the broadband service with phone line rental to allow telcos to offer naked DSL services in regional Australia.

The decision to tie in the wholesale price into the cost for the infrastructure is concerning to Optus because as Australia shifts onto the National Broadband Network (NBN), this could potentially leave it open to raising prices as the infrastructure costs more than originally expected.

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