Telstra to take wholesale price hit

Telstra to take wholesale price hit

Wholesale customers may get a 10 per cent cut in prices they pay for copper network services

The Australian Competition and Consumer Commission (ACCC) is eyeing a 9.6 per cent drop in prices that operators pay to use Telstra’s copper network to provide telecommunications services.

The new prices for seven access services will apply from 1 October 2015 to June 9, 2019, the competition watchdog said in a draft decision released on Monday.

This revised the 0.7 per cent fall estimated in the March draft decision. The ACCC said this was an interim figure and subject to it considering outstanding issues.

The ACCC said the most important issue for the draft decision on prices is the effect of the transition from Telstra’s fixed line network to the NBN.

NBN (the company) is replacing Telstra’s legacy network as the infrastructure over which Australians are receiving fixed line voice and broadband communications.

As services are disconnected from the legacy network, some assets become redundant and the efficiencies of servicing large numbers of customers are progressively lost, the ACCC said.

ACCC chairman, Rod Sims said in a statement that users of Telstra’s network should not pay higher costs that result from fewer customers as NBN migration occurs.

“If there is no adjustment for these higher costs then customers who have not been migrated to the NBN will pay significantly higher prices for copper-based services. Eventually these prices would reach absurd levels for the unlucky last copper customers,” he said.

“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.”

Sims added that this draft decision reflects the fact that Telstra had the opportunity in its negotiations with NBN to ensure that it received consideration for the effects of service migration, including the costs associated with the loss of economies of scale and asset redundancy.

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Tags broadbandNBNcopper networknational broadband networkacccAustralian Competition and Consumer Commissionlegacy network

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