Friday, April 29, 2011

Australia - Regulator has opened an inquiry into final access determination for fixed line services

[accc] The Australian Competition and Consumer Commission today commenced a public inquiry and issued a discussion paper on the making of final access determinations (FADs) for the six declared fixed line telecommunications services.

The discussion paper sets out proposed price and non-price terms for each of the declared services for a proposed five year regulatory period from 1 July 2011 to 30 June 2016.

“The proposed five year period will provide all industry participants with certainty regarding fixed line prices during the initial transition to the National Broadband Network,” acting ACCC chairman Michael Schaper said.

“Today marks a further step towards providing stability to industry in relation to wholesale access to Telstra’s fixed line network. While parties will still be able to negotiate their own terms and conditions of access, the FADs will, once they are made, establish a benchmark for Telstra and access seekers to fall back on,” Dr Schaper said.

The discussion paper follows the interim access determinations (IAD) made by the ACCC on 2 March 2011. As a result of legislative changes to the telecommunications access regime made late last year, the ACCC must hold a public inquiry to make FADs for each declared service. This must be commenced at least 6 months before the IAD expires.

The discussion paper includes the draft FADs. Prices for the five year regulatory period have been calculated using the same Building Block pricing framework as in
the IADs, carried forward over five years.

After considering submissions received on the discussion paper and draft FADs, the ACCC plans to publish a Final Report and make five year FADs for the declared fixed
line services. This approach recognises that many pricing issues have been previously subject to extensive consultation. This approach will provide price certainty and stability for the industry.

The ACCC recognises some issues may arise during this consultation process that will require further and more detailed consideration. The ACCC will adopt a flexible approach to dealing with any such issues, and notes that it has the power to vary the FADs if required.

The draft prices for the six fixed line services have been derived using a Building Block pricing framework, which is commonly used in other regulated industries. The discussion paper sets out in detail the methodology, assumptions and model inputs used by the ACCC to estimate these prices.

Consistent with the IADs, the ACCC proposes to set a single Unconditioned Local Loop Service price for the metropolitan and provincial areas where the majority of Australia’s population lives. This approach will promote industry stability and ease the transition to the NBN. Proposed wholesale prices for other services, including Wholesale Line Rental and the Local Carriage Service are lower than under the previous pricing approach, which was based on Telstra’s retail prices for these services.

The ACCC invites all interested parties to make submissions to the discussion paper by 3 June 2011.

ACCC proposes five year regulatory pricing period in final access determinations for fixed line services

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