news The Australian Competition and Consumer Commission’s (ACCC) decision to declare (regulate) a wholesale ADSL service and set an interim access determination for it has elicited strong reactions from Telstra and Optus. While Telstra expressed disappointment at the ACCC decision, Optus welcomed it as a significant win for both consumers and the industry.

In a statement expressing disappointment at the decision yesterday, Telstra company secretary Damien Coleman said that Telstra did not believe that market conditions justified increased regulation of Telstra’s copper network at this time. He added that the company is assessing the financial implication of this decision but it does not expect the impact in fiscal 2012 to be material to its results.

Coleman said that Telstra “continues to work towards acceptance of the Structural Separation Undertaking by the ACCC, which is the critical remaining condition precedent to Telstra’s Definitive Agreements with NBN Co and the Commonwealth on the National Broadband Network.”

The Australian Competition and Consumer Commission’s (ACCC) decision to declare wholesale ADSL services is a bid to promote the long-term interests of end-users of fixed-line broadband internet services throughout Australia. On February 14th, the ACCC had ‘declared’ the wholesale ADSL service under section 152AL of the Competition and Consumer Act 2010. On its website, ACCC says that Telstra currently retains dominant positions in the markets for both retail and wholesale fixed-line broadband services, and acknowledges that despite the deployment of competitive broadband infrastructure in some areas over the past decade, competition in the supply of ADSL service was not effective.

The ACCC says the declaration will remove impediments to competitive internet service providers gaining access to Telstra’s national ADSL network on efficient terms in order to supply retail services, including to around 11 per cent of premises where Telstra’s network architecture has prevented competitors from using their own infrastructure.

The ACCC has also commenced an inquiry into the making of a final access determination for the wholesale ADSL service. However, given that the inquiry is unlikely to conclude within six months, the ACCC was legislatively required to make an interim access determination for the ADSL service, setting out terms and conditions of access for the next 12 months.

The ACCC has adopted Telstra’s current wholesale pricing construct for the interim access determination, and has set prices using a Retail Minus Retail Cost methodology. Acting Chairman Michael Schaper said: “As a result of these decisions, end-users can expect to have access to a greater range of competitive fixed-line broadband internet service offerings.”

Welcoming the decision, Andrew Sheridan, GM of interconnect and economic regulation at Optus said this was an important step in the transition to an NBN environment. He added that the declaration “… will enable Telstra’s competitors to compete on a level playing field while ensuring more competitive and uniform access terms for ADSL services. For consumers, this decision opens up opportunities for more competitive broadband services, particularly in regional Australia, at more affordable prices.” He said the company was still reviewing the details of the interim access determination but expressed the view that the initial price terms looked positive for the industry.

Image credit: Telstra

Related posts:

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2. ACCC sets ULL price at $16 flat rate
3. Telstra ‘price squeeze’: Hackett slams ACCC inaction
4. Telstra has resolved South Brisbane issue, says ACCC
5. ACCC kills NBN/Telstra wireless clause

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1. MikeY
   Posted 16/02/2012 at 10:55 am | Permalink | Reply

   Telstra unhappy ? – Yes
   Worried ? – No

   “Telstra does not expect the impact of this decision in fiscal 2012 to be material.”

   http://www.telstra.com.au/abouttelstra/download/document/tls822-accc-declaration-of-wholesale-dsl.pdf

2. Abel Adamski
   Posted 16/02/2012 at 11:01 am | Permalink | Reply

   Renai, No comment. I do note however in other reports the pricing quoted for the cap on wholesale ADSL and also Wholesale Copper Landline connection to run it on totals in the vicinity of $65 / month. Telstra is complaining, demonstrates how much cheaper and better an option using existing copper and ADSL is than that NBN white elephant

   • Goku Missile Crisis
     Posted 16/02/2012 at 11:39 am | Permalink | Reply

     The problem isn’t whether we need a nationwide fibre deployment. We do. The copper network is old, expensive to maintain, and extremely limited in terms of bandwidth.

     The problem is whether the NBN is the optimal deployment. It’s not. Even under the most recent terms, NBN Co is still guaranteed outrageous margins based on poor modelling.

     Telstra’s whingeing on this, just like any other issue, is simply to be expected from a company that still has a monopoly mentality. They feel entitled to maintain and grow their profits in all directions as though their market position was God-given. They are enjoying their time at the NBN trough as much as anyone.

     • Brendan
       Posted 16/02/2012 at 12:22 pm | Permalink | Reply

       “The problem is whether the NBN is the optimal deployment. It’s not. Even under the most recent terms, NBN Co is still guaranteed outrageous margins based on poor modelling.”

       No fibre deployment can be “optimal” and reach the target deployment percentages currently planned.

       I’m sorry, but no business will extend to that scale and remain efficient. Telstra is a wonderful example of that. Even though it’s an agressive money making enterprise, it is neither efficient or optimal in it’s deployment methodologies.

       It would be naive to presume Telstra did not anticipate this occurring at some point. Calculated risk. In the mean time, their aggressive re-entry into consumer broadband will have already offset any potential financial impact.

       Just as they have done flouting competition notices from the ACCC in the past.

       The only person who actually seems to be upset is Commsday’s Grahame Lynch, whom has gone on a complete bender framing everything as Conroy’s fault. It’s like he’s channeling Turnbull — http://www.commsday.com/commsday/2012/comment-dsl-declaration-transforms-telstra-nbn-prep-school/

       Anyone else following the pricing shenanigans would have presumed that at some point, the ACCC would call Telstra to account. They have.

       Telstra, if nothing else, now has the regulatory certainty they were after.

3. Goddy
   Posted 16/02/2012 at 9:32 pm | Permalink | Reply

   This is simply what should have happened years ago but didn’t. Now, the ACCC have a new fight in Southb Brisbane that they’ve already given up on.

4. ross
   Posted 16/02/2012 at 9:54 pm | Permalink | Reply

   im in south brisbane too goddy.. they know that since they’ve done south brisbane they can get away with it at other sites now too they’re not unhappy

5. Brendan
   Posted 17/02/2012 at 1:38 pm | Permalink | Reply

   South Brisbane is the poster child for Turnbull’s “commercial interests” broadband policy.

6. Abel Adamski
   Posted 20/02/2012 at 1:44 am | Permalink | Reply

   Let us not forget some basic realities, any private company has ONE prime directive, a legal obligation in fact, namely the shareholders interest, both in terms of dividends, but also in prudent investment and growth in asset value. This runs counter to the National interest of the NBN. The Libs have always put the market and the shareholder/investors and business interest over the National interest. A very short sighted approach as the National interest in the longer term ends up being also the business best interest., the converse is also true, best business sector interest too often ends up being detrimental to National interest and ultimately the business and investor interest also. GFC a Case in point