ACCC Reject Telstra’s New ULLS Stance

The ACCC again rejects Telstra’s pricing structure on what it wants to rivals to use its copper network

The Australian Competition and Consumer Commission has rejected Telstra’s Undertaking application for a $30 monthly fee it will charge rivals to use of itsUnconditioned Local Loop Service in metropolitan areas.

The ULLS gives an access to competitors for the use of the copper pair without any dial tone or carriage service.  This allows the access seeker to use its own equipment in an exchange to provide a range of services, including traditional voice services and high speed internet access, to the end-user.

There are approximately 10 million services in operation with around seven million in for the densely populated metropolitan areas (Band 2). Telstra’s Undertaking only covers the Band 2 exchange service areas of Australia servicing about 70 per cent of the population but only 0.2 per cent of the land.

“The ULLS is an essential input used by access seekers in combination with their own equipment to provide competitive telephony and high-speed broadband services to consumers and businesses,” ACCC Chairman, Graeme Samuel, said.”The ACCC believes that Telstra’s proposed price is unlikely to promote competition in the broadband and telephony markets. It may also discourage investment in telecommunications infrastructure. The ACCC also considers that a $30 monthly charge would result in Telstra recovering more than is necessary to promote its legitimate business interest in providing this service.”

In rejecting the undertaking the ACCC notes that Telstra’s proposed monthly charge was significantly above estimates derived from benchmarking against comparator countries.
The ACCC’s final decision on Telstra’s ULLS Undertaking will be available on the ACCC website.

A spokesperson for Telstra said:

“We will review the decision before making a more detailed response, but it is another demonstration that there needs to be a lasting resolution on the copper network cost issue – to provide certainty for network builders and access seekers alike,” he said. “Telstra is ready to provide its TEA model to an independent reviewer and again calls on the ACCC to do the same with its cost model.”

“In the absence of the independent review of both cost models, Telstra has continued to review and find serious flaws in the ACCC model. We have sent a number of letters to the ACCC quantifying the errors to date, which we believe run to many billions of dollars.”

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