1. Background

On 3 March 2011, the Australian Consumer & Competition Commission ("ACCC") issued its Interim Access Determination ("Determination"), ending the freeze on wholesale access prices for access to Telstra's copper network. The freeze has been in place since December 2009 to enable the ACCC to review the way the prices were calculated. The Determination is the first telecommunications pricing decision made by the ACCC under new laws that restrict Telstra's ability to challenge the ACCC in the Federal Court and High Court. The ACCC has said that the Determination will promote industry stability during the transition to the NBN.

2. Key changes

The key changes introduced by the Determination are the:

  • reduction of Telstra's monthly wholesale line rental changes by nearly $5 (reduced to a national flat fee of $22.10 from $25.57 for homes and $26.93 for businesses); and
  • removal of the distinction between city, urban and regional areas, with the ACCC setting a single access price for the unconditioned (or unbundled) local loop ("ULL") of $16 per month for CBDs, metropolitan areas and regional areas.

The single price set by the ACCC is the same as the previous Band 2 (Metropolitan) pricing. However, this represents an increase of almost $10 to the former Band 1 (CBD) pricing and a decrease of just over $15 to the Band 3 (Regional) pricing.

3. Implications

While these prices do not affect Telstra's costs, the pricing could discourage competitors from serving customers if the ULL price is too high, because it increases retail prices. In addition, these changes mean that the ACCC has effectively reduced the value of Telstra's copper network and cut Telstra's fixed-line revenue by millions of dollars.

The Determination applies retrospectively from 1 January 2011 and will be replaced by a final determination by the end of 2011.

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