ACCC pricing process 'ridiculous' and 'stupid'

James Riley
Tuesday, 25 August 2009 15:32

IT Industry - Market

The consumer watchdog’s draft pricing for fixed-line wholesale services will kill new investment in copper-based broadband, punching a big hole in any interim planning in the lead up to the years-away NBN roll-out, access seekers say.

Primus Telecom chief executive officer Ravi Bhatia reacted to the Australian Competition and Consumer Commission’s unconditioned local loop (ULL) pricing with disbelief, calling the ACCC process for reaching its draft pricing "ridiculous" and "stupid."

The ACCC this week announced pricing principles and indicative pricing for six fixed line wholesale pricing services for the next three years – rising steadily each year. The commission says the draft pricing principles are made on a cost basis.

The draft pricing includes metropolitan ULL access rates to rise from the current price of $14.30 to $16.90 next year and more than $23 in 2011-12.

Bhatia savages the price increases as impossible to justify. But he is equally critical about the “black box” decision-making process, saying it is impossible to understand how the numbers are decided on, or why it takes so long for the ACCC to make them.

"The decision was an absolute shocker … a shocker," Bhatia said. "The prices are unreasonable and the process is ridiculous."

"The process has been going on for three years. And no-one seems to be doing anything to fix this stupid process."

Bhatia claims the process simply takes too long, with consultations punctuated with long periods of silence from the ACCC. The length of the process made decisions about investment difficult, he said.

And the just-announced draft pricing hikes would put a very big hole in the roll-out plans of access seekers looking to expand their ADSL offerings by installing more DSLAM across Australian exchanges – something that will mean some communities will suffer below standard broadband for years, until the National Broadband Network arrives at the doorstep.

The "process could not get more nonsensical than it is right now," Bhatia said. "And there are (Primus investments) that probably won’t go ahead now. I simply cannot find words to describe this."

The ACCC says it has an improved range of information on which its draft pricing decisions are made, “including cost model data and international benchmarking, that provide it with a better indication of the costs of providing fixed line services."

"With the advantage of this better data, the ACCC has been able to simplify the pricing structure for access to some of these services by using a two zone approach," the Commission said.

"This more accurately reflects the costs of providing services in these zones without distorting competitive signals in the market."