Telstra counters rivals letter to ACCC chairman

Stuart Corner
Monday, 14 September 2009 14:59

IT Industry - Strategy

The ACCC has a formal process for accepting commentary on its draft decisions, but the major telcos are bypassing this with direct appeals to the ACCC's chairman, Graeme Samuel.

Last week The CEOs of seven of Telstra's fixed line competitors - Netspace; Macquarie Telecom; Optus; iiNet; Primus; Internode and TransACT - wrote to Samuel, warning that the ACCC's recently published indicative prices for fixed line services, if implemented, would lead to a significant increase in prices of services to end users.

Specifically they were concerned about the cost of the unconditioned local loop service (ULLS) which is becoming increasingly popular with competing telcos who want to provide both broadband and voice services from their own exchange based infrastructure. This is the only one of the six services for which the ACCC is proposing prices changes. Prices for all others would decrease under the proposed pricing principles. However their letter did not make this distinction.

Telstra has now written to Samuel to set the record straight. In the letter, David Quilty, Telstra's group managing director public policy and communications, says: "The letter [from the seven rival CEOs] provides a narrow view of the issues in the [the ACCC's draft pricing principles] and the seven carriers have selectively highlighted the one proposed price change that negatively affects them...The ULLS [unconditioned local loop price is the only service that the Commission proposes to increase and Telstra considers that gradual increase will still fall short of full cost recovery."

In addition to changing prices, ACCC is proposing changing the pricing zones for ULLS from four - CBD, metro, regional and rural - to just two, measured by rather different parameters, and according to Quilty this would mean that the price for an unbundled local loop service price for regional towns would reduce to almost half its current level. However prices in major cities, where the bulk of ULLS services are located, would rise significantly, and would lead to significant prices increases for broadband services, the rival carriers claim.

Quilty adds that: "The OECD found that current regulated prices in Australia are amongst the lowest in the world for the unbundled local loop service and line sharing service. This is anomalous, given that among OECD members Australia has the equal lowest population density, one of the most uneven and dispersed population distributions, and the equal highest proportion of access lines in very low density areas."

He promised that Telstra would elaborate its position in its formal response to the ACCC's draft pricing principles.