ACCC nixes Telstra wholesale gouge

Cuts price, competitors yell 'not enough!'

The Australian Competition and Consumer Commission (ACCC) has driven its nope-mobile down to Collins Street and dropped a couple of tons of forget-it at the door of Australia's dominant carrier Telstra: rather than putting up prices for fixed voice and broadband services, the carrier's asked to cop a price cut.

The regulator says that since Australia's National Broadband Network (NBN) is “replacing Telstra's legacy network”* the carrier can't justify its request for a price increase of 7.2 per cent in access prices.

Instead, the ACCC is cutting all seven access services covered by the decision by a uniform 0.7 per cent. The services covered by the decision include:

  • In the DSL market, the unconditioned local loop (ULL), line sharing service (LSS), and wholesale ADSL services; and
  • The telephony services – local carriage service (LCS), fixed originating access, and fixed terminating access.

ACCC Chairman Rod Sims says the price cut and the decision to hold prices until 30 June 2019 means “the prices access seekers will pay will decline in real terms over the next four years by around 12 per cent”.

“There are two conceptual underpinnings to this decision. First, Telstra will no longer bear all the costs of declining consumer demand for fixed-line services. Second, however, access seekers will only pay for the assets needed to supply them, and not for any underutilisation caused by the NBN”, Sims said.

The draft decision here (PDF) – forgive Vulture South for skimping on reading the whole 221 pages – has pleased nobody.

Telstra, never reluctant to cry poor, was lobbying for a price increase because the NBN is sure send the incumbent into penury; while competitors like Optus are equally certain that the price wasn't cut far enough.

From here, the industry has until April 30 to continue firing paper-bombs at the regulator to try and get it to move further in one direction or the other. ®

*Bootnote: Yes, we know. The NBN is replacing Telstra's network with a little bit of fibre, and a lot of services that one way or the other use legacy Telstra infrastructure. Go figure. ®

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