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