Turnbullnomics trashed as Oz regulator cuts telecoms prices

Order for 9.6 per cent cut in wholesale prices is BAD NEWS according to comms minister

A bunch of Australian fixed telephony and broadband users are about to suffer under a regime of lower prices.

In spite of communications minister Malcolm Turnbull's 2014 assertion that lower prices are against consumer's interests, the Australian Competition and Consumer Commission has told Telstra to cut its wholesale fixed network access prices.

The decision calls for across-the-board fixed network wholesale price cuts of 9.6 per cent.

The draft decision sets prices for seven access services from October this year until 30 June 2019.

Those wholesale services include fixed line telephony and wholesale access to Telstra's copper for broadband access – for example, the “naked” copper that competitive ISPs connect to their own DSL equipment for customer access.

A key point of the ACCC's reasoning is that Telstra customers shouldn't be footing the bill for NBN migration. The incumbent had argued that it would suffer higher per-customer costs as users were moved to the NBN wholesale network, even if they remained as Telstra retail customers.

Back in March, the ACCC had issued a draft determination to that effect, denying Telstra's request for a 7.2 per cent increase in access prices.

“Our draft decision is that assets that become redundant as a result of migration will be removed from the asset base. Also, users of the copper network will not pay the higher prices that result from the loss of scale efficiencies as the number of services remaining on the copper network falls,” ACCC commissioner Rod Sims explained in today's announcement.

The current decision is still a draft, with the regulator soliciting further submissions, and it's a certainty that Telstra will at least be trying to reverse the price cut, even if it gives up its attempt at increasing prices.

One still-contentious point is the ACCC's assertion that the AU$11.2 billion Telstra is being paid to either retire its copper (for fibre customers) or transfer the copper to the government network builder nbnTM covers the carrier's migration losses.

Telstra told the Sydney Morning Herald the ACCC “has overlooked what the NBN deal is actually about”, adding: “The deal does not account for costs incurred on our network in the switch to the NBN.”

Submissions about the ACCC's draft decision are open until 17 July 2015.

In other regulatory news, the Australian Financial Review reports that the ACCC expects to announce whether to approve nbnTM's AU$800 million deal to buy the Optus HFC infrastructure, issuing a draft decision within a month. ®

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