ACCC to declare line rentals, develop new pricing principles

Stuart Corner
Sunday, 19 March 2006 12:43

IT Policy - Regulation

The ACCC has issued a draft decision to continue its regulation of local call services - local call resale will continue to be a declared service - and to formalise its current approach to the regulation of line rentals - this will become a declared service in its own right.

"The ACCC's draft decision is that re-declaration of the LCS and formal declaration of a basic access service will be in the long-term interest of end-users", ACCC chairman, Graeme Samuel, said.

The ACCC's review found that, with the exception of CBD areas, which will remain unregulated, there are currently no effective substitutes for Telstra's LCS or line rental service and the prospect of more extensive rollouts in the foreseeable period is still uncertain.

However, the ACCC has chosen to limit the period of declaration to two years from 1 July 2006, "in light of the potential for facilities-based competition to develop in the relatively near future."

The ACCC presently looks at line rental in the context of local call pricing, but says this is no longer seen as a satisfactory or efficient way to regulate the line rental service. "Regulation should be explicit and transparent and the separate declaration of line rental will achieve this," it says.

"The separate regulation of the line rental service is also justified in its own right, in part because this service can be used in conjunction with other services and not just local calls.'

Both the local call service and line rental are currently priced on a retail-minus retail costs basis, but the ACCC says this approach is proving to be increasingly problematic in promoting desirable market outcomes. It has issued a draft on its proposed future pricing of these services, but says that, pending the development of an independent cost model to estimate cost-based prices for these declared services, it may need to use the retail-minus principles on an interim basis.

The ACCC is calling for submissions on its draft decision to declare the LCS and basic access services, and its draft view on the appropriate pricing principle to apply to these services. Submissions are required by 21 April 2006.

Its draft view on is available here.