The Australian Competition and Consumer Commission (ACCC) has ordered Telstra to cut the price it charges other telcos to access its copper network by 9.4 per cent, which may mean cheaper phone and internet services for consumers.
In its final decision today, the ACCC required a one-off uniform decrease of 9.4 per cent for unconditioned local loop service (ULLS), line sharing service (LSS), wholesale line rental service (WLR), local carriage service (LCS), fixed originating access service (FOAS), fixed terminating access service (FTAS) and wholesale ADSL.
The final price changes will take effect on 1 November 2015 and go to 30 June 2019.
“The ACCC has dealt with a number of complex issues during this inquiry, including the unique circumstances of the transition from Telstra’s copper network to the NBN. Our final decision on prices is the result of a number of considerations, with downward pressures more than offsetting upward pressures,” ACCC Chairman Rod Sims said.
“Downward pressures largely come from lower expenditures, falling cost of capital, the treatment of the effects of migration to the NBN and updated information on the NBN rollout. These more than offset upward pressures from a shrinking fixed line market due to consumers moving away from fixed line services and to mobile services.”
In March this year, the ACCC proposed a one-off uniform decrease of 0.7 per cent, which was to take effect on 1 July 2015, but now has been changed.
- For ULLS Bands 1 to 3, the price would change from $16.21 per line per month to $14.68
- ULLS Band 4 from $48.19 per line per month to $43.65
- WLR from $22.84 per line per month to $20.69
- LSS from $1.80 per line per month to $1.63
- LCS from 8.9 cents per call to 8.06 cents
- FOAS & FTAS from 0.95 cents per minute to 0.86 cents
- Wholesale ADSL Zone 1 from $24.44 per port per month to $22.14
- Wholesale ADSL Zone 2/3 from $29.66 per port per month to $26.87
- Wholesale AGVC/VLAN from $32.31 per Mbps per month to $29.27
“Factors putting downward pressure on prices since they were last set in 2011 include lower costs of the copper network on which prices are determined, due in part to the targeted, bottom up methodology used to forecast operating and capital expenditures under new information arrangements the ACCC has put in place for this inquiry,” the ACCC said.
“Other contributors to lower costs are the depreciation of the fixed line assets over time and lower operating and replacement investment costs due to the decline in the size of the fixed line market as consumers have switched to mobile services.
“There have also been external factors that have added to the downward pressure on prices. These are a very significant decline in the cost of capital since 2011; low inflation over the 2015 financial year which passes through to the nominal charges the ACCC sets; and new forecasts from NBN Co on its plan and rollout schedule for the NBN,” he said.
In October 2014 as part of an Inquiry into Final Access Determinations on the pricing, Telstra proposed a uniform price increase of 7.2 per cent across all services to ensure recovery of its supply costs.
Optus and TPG opposed Telstra’s proposal. Optus stated the country’s largest telco wouldn’t have to use a price increase to recover its costs, as there would still be incentive to invest in its fixed line network. TGP said the proposal is “completely inconsistent with the logic of the current methodology for assessing appropriate prices”.