New pricing principles proposed for declared fixed-line services

Abstract

The Australian Competition and Consumer Commission (ACCC) has proposed an important change to the access pricing principles it applies to five of the six fixed-line services declared under Pt XIC of the 'Competition and Consumer Act 2010' (Cth) (CCA), formerly known as the 'Trade Practices Act 1974' (Cth) (TPA). In its 2010 review of the 1997 telecommunications access pricing principles for fixed-line services (the proposed pricing principles), the ACCC announced it no longer has the intention of using the so-called "TSLRIC+ methodology" to determine if an access price is cost-based. Instead, it proposes the use of a building block model (BBM) methodology, which will, among other things, involve the calculation of an initial value of Telstra's regulatory asset base (RAB) using a depreciated actual cost (DAC) approach. Although any pricing methodology the ACCC adopts is, strictly speaking, non-binding, the proposed change will, as a matter of practice, inform the ACCC's thinking when exercising its new power to make up-front access determinations under the recently enacted 'Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Act 2010' (Cth) and will mark a departure from the cost-based standard which has been the worldwide industry norm for fixed-line access services since market liberalisation in the 1990s.