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ACCC Orders 9.4% Access Prices Cut: Telstra Reportedly Considering Appeal Options

ACCC Orders 9.4% Access Prices Cut: Telstra Reportedly Considering Appeal OptionsThe ACCC today advised it had reached its final decision, requiring a one-off uniform fall of 9.4 per cent in access prices from current levels, which will apply from November 1, 2015 until June 30, 2019.

The decision revises downward the ACCC’s draft ruling in June of 9.6 per cent.

ACCC chairman Rod Sims noted the decision had come about from a number of considerations, with “downward pressures more than offsetting upward pressures”.

“Downward pressures largely come from lower expenditures, falling cost of capital, the treatment of the effects of migration to the NBN and updated information on the NBN rollout,” Sims commented. “These more than offset upward pressures from a shrinking fixed line market due to consumers moving away from fixed line services and to mobile services.”

Sims stated users of Telstra’s network “should not pay the higher costs that result from fewer customers as NBN migration occurs”.

Without an adjustment for higher costs, customers not yet migrated to the NBN “will ultimately pay significantly higher prices for copper based services”, he added.

“The ACCC has taken this approach because it considers that users of the fixed line network have not caused the asset redundancy and under-utilisation and will not be able to use those assets and capacity in the future,” Sims commented.

“It would not be in the long-term interests of end users (LTIE) for costs to be allocated to users of the network who do not cause them, particularly when Telstra has an avenue to recover those costs.”

Fairfax Media has reported that Telstra, which had proposed a 7.2 per cent increase in charges, is considering its legal options, with a Telstra spokesman stating it is considering its various options for appeal.

“The decision does not follow the ACCC’s own fixed pricing principles that require Telstra to be given the opportunity to recover from wholesale customers the costs of providing services to them,” Fairfax reported the spokesman as saying in a statement. “Any regulated entity should be concerned by this decision, especially in circumstances where merits review has been removed.  

“We are particularly disappointed to see the ACCC depart from its draft decision in March, which recognised the importance of providing price stability to the industry at this time of transition to the NBN.”