ACCC triumphs over Optus in mobile termination pricing dispute

Stuart Corner
Wednesday, 22 November 2006 10:19

IT Policy - Regulation

Optus' proposal to charge other carriers 17 cents per minute to terminate calls on its mobile network has been rejected by the Australian Competition Tribunal (ACT), increasing the likelihood that the ACCC-determined price of 12 cents per minute will apply.

The ACT has rejected Optus' proposed undertaking for the supply of its Domestic GSM Terminating Access Service. The undertaking was rejected by the ACCC in February 2006 and Optus appealed the decision to the ACT.

Optus lodged the undertaking in December 2004 proposing that the price for the Mobile Terminating Access Service should trend from over 20 cents per minute down to 17 cents per minute in 2007. The ACCC had previously released a pricing determination proposing that prices charged by all mobile carriers should fall to 12 cents per minute by 2007.

The price charged by Optus to other carriers to terminate calls on its mobile network will still be subject to commercial negotiation, but if agreement cannot be reached, it will be subject to arbitration by the ACCC which will use its reducing-to-12-cents-in-2007 determination as a guide.

The ACCC has also rejected mobile termination access undertakings from Vodafone  and from Hutchison and is arbitrating a number of access disputes in relation to mobile termination charges imposed by Hutchison, Vodafone and Telstra.

The ACCC says it expects that the tribunal's reasons for its decision will be publicly available on 24 November subject to confidentiality issues being resolved.

The ACCC has engaged WIK Consult to develop a 'bottom-up' cost model, to inform it of cost estimates of the mobile termination service from 30 June 2007 when its current pricing determination expires."