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ACCC Give Telstra Guidlines Re Copper Network

ACCC Give Telstra Guidlines Re Copper Network

This causes implications as well as to the ACCC with the issues during the inquiry in place.
The draft of the decision, which is for the period 1 July 2015 to 30 June 2019, is for a one-off fall in access to prices by 0.7% for the seven access services. The period up until Oct 2014 was 7.2% by way of comparison.
“The draft decision on prices ensures nominal price stability in the wholesale market for telecommunications services and will promote competition in the transition to the NBN,” ACCC Chairman Rod Sims said.
“Given current inflation however, this uniform price fall means the prices access seekers pay will decline in real terms over the next four years by around 12 per cent.”

Sims went on to explain there were two main factors underpinning the ACCC’s decision. Firstly, all the costs of declining consumer demand for the fixed line services will no longer be borne by Telstra and second, access seekers will only pay for the assets they need. Any utilisation by the NBN itself are not included.

This is a revised approach to the past way in which the copper network was allocated to users by Telstra and means there will a full allocation of costs across all services supplied, and that declining demand is no longer the responsibility of Telstra in terms of costs. All users now of the network share all costs, including those of access seekers.

The outline of its position statement in Oct 2014 outlines this approach by the ACCC. The cost allocation framework allocates costs to NBN Co for its use of leased assets, while assets that are decommissioned or used less because of the NBN are removed from the cost base for the fixed line service. Capital expenditures incurred by Telstra in making ready for the NBN also cannot be passed on.

Contributing to the draft price decision addition to the approach taken on cost allocation and NBN arrangements have been a number of factors.
“An important factor is the decline in the cost of capital driven largely by lower interest rates. Additional factors contributing to lower prices include further depreciation of the asset base and lower operating costs due to the decline in the use of the network,” Mr Sims said.

Telstra has made considerable effort to provide the information required on whether its forecasts represent efficient costs of supplying services for the copper network.  Still more information in this regard from Telstra is needed says the ACCC.

The issue of efficient costs is one of three issues that the ACCC will consider further before reaching a final decision and another is to make an additional judgement for the actual effect of the NBN. The ACCC is considering whether rising unit costs due to loss of economies of scale on the copper network as customers migrate to the NBN should be excluded. The third where the position is still being considered by the NBN is the verification of some of the costs allocations from within the revised approach.

The ACCC says it invites stakeholder views on its draft decision on the primary price terms to be included in the final access determinations for the next regulatory period, including reasons for those views. Submissions are due by 5pm on Thursday 30 April 2015. The ACCC intends to release its final decision at the end of June 2015. Draft decisions on connection charges and the non-price terms and conditions will be released later this month.