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Telecommunications ACCC gives Telstra a 'fail' on wholesale v retail pricing
Telecommunications ACCC gives Telstra a 'fail' on wholesale v retail pricing | ACCC gives Telstra a 'fail' on wholesale v retail pricing |
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| Written by Stuart Corner | |
| Monday, 10 April 2006 | |
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According to the ACCC, the main reason for the 'fail' results for ADSL-related services is the average cost of transforming the core service—the ULLS—into the retail ADSL service. "Although Telstra has historically failed the imputation test for local call services, its recent increase to its wholesale residential line rental charges, without a commensurate increase to retail charges, has resulted in the margin by which it fails this test increasing (ie becoming more negative) for the first time." The ACCC says it is investigating whether the competition concerns arising are significant enough to warrant any further action. "[The report] has raised further questions as to the effect of Telstra's wholesale and retail pricing on competition for the supply of fixed voice services." The report presents an imputation analysis that compares Telstra's retail prices to the prices of three core telecommunications access services: local carriage service, the PSTN originating and terminating access service and the unconditioned local loop service. The analysis is designed to give an indication whether there is likely to be sufficient margins between Telstra's retail prices and the prices it charges other service providers to use the core services (plus related costs) to allow efficient firms to compete at the retail level. On the plus side, the ACCC says the report does not reveal any systematic discrimination by Telstra against its wholesale customers. However on pricing, the ACCC says the results for fixed-line voice services have been mixed, with increasing margins for fixed-to-mobile calls and declining margins for local services, international long distance and the overall bundle of fixed-line voice services. The negative margins for residential local services (line rental and local calls) increased in the December quarter was due to an increase in the access price of Telstra's wholesale residential local services product, Home Access. The ACCC says results for services supplied over the unconditioned local loop core service deteriorated, with imputed margins remaining negative except when the ULLS is used to supply a bundle of ADSL and voice services to business customers. The report is available from the ACCC's website, here.
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