Telstra argued that a downturn in usage had forced it to charge remaining customers more money for the same level of service. Source: Getty Images

The Australian Competition and Consumer Commission, in a final decision today, required a one-off uniform price fall of 9.4 per cent for wholesale access to Telstra’s legacy copper network to provide services. The decision revises the regulator’s draft ruling in June for a 9.6 per cent fall.

Telstra (TLS) said it was “particularly disappointed’ in the ruling and would be considering options for appeal, which includes the possibility of legal action.

Internet and phone services providers must rent access to Telstra’s copper network, and any increase or decrease in access pricing is likely to reduce phone and internet bills for Australians who access the network.

ACCC chairman Rod Sims told The Australian the decision should lead to cheaper bills, but said the regulator wouldn’t be forcing companies, such as Optus and TPG who access the network, to cut their prices as a result of the ruling.

“We won’t be enforcing anything here,” Mr Sims said. “Absolutely we will monitor it. (But) there’s a lot of competition in the sector and we’re happy to rely on the market to see if cheaper access is passed on through better investment or lower prices.”

Telstra had initially asked for a 7.2 per cent increase, while iiNet had lobbied for a 17 per cent reduction.

However, low interest rates and cheaper access to credit led the ACCC to cut prices, which it said more than offset the costs associated with maintaining the legacy copper network during the migration to the National Broadband Network.

“Users of Telstra’s network should not pay the higher costs that result from fewer customers as NBN migration occurs,” Mr Sims said.

Telstra had been accused of attempting to “double-dip” on extracting as much capital from the soon-to-be obsolete copper network. The telco is slated to collect $98 billion from federal taxpayers to cover the cost of the migration of customers from its fixed line to the NBN.

The company had argued that a downturn in usage brought on by customers switching to the National Broadband Network had forced it to charge remaining customers more money for the same level of service.

Telstra slammed the watchdog’s decision in a statement today, saying the ruling did not follow the ACCC’s own fixed pricing principles and that “any regulated entity should be concerned by this decision”.

But Mr Sims said it was a unique ruling and the decision was not applicable to other regulatory enterprises.

“Whenever you’re regulating the price of a monopoly asset it’s impossible to keep both sides happy,” he said.

“We’re setting prices at a time when interest rates are low. But Telstra’s benefited a lot from higher rates over a number of years.”

Telstra is expected to have pocketed a windfall of close to $200 million from consumers thanks to the long delay in the ACCC reaching its final decision, Competitive Carriers Coalition chairman Matt Healy said.

Australian consumers paid “lamentable” prices for telecommunications services compared to other developed countries, he said, with basic fixed line voice and broadband service prices consistently at, or near to, the highest in the developed world.

“The commission deserves praise for holding the line in the face of unprecedented pressure to allow Telstra to continue to enjoy monopoly rents,” he said.

“Anything less would lack credibility, and would have had terrible economy-wide consequences, as the Australian economy struggles to move from the mining boom to a digital economy.”

Mr Sims said although Telstra was arguing for higher prices for its copper network now, the telco will soon be lobbying for lower NBN access charges.

“We’ll be price-controlling the NBN as well, and when we come to pricing decisions we’ll be having the NBN on one side and Telstra, Optus and TPG on the other side,” he said.

The ACCC’s final decision also covers connection and disconnection charges and a decision to not exempt the CBD areas from coverage under the final access determinations.

The new pricing will apply from the start of November through to the end of June 2019.

Australian consumers are likely to see cheaper phone and internet bills after the consumer regulator said it was mandating a near 10 per cent drop in the price Telstra charges other operators to access its ageing copper network.

The Australian Competition and Consumer Commission, in its final decision today, required a one-off uniform price fall of 9.4 per cent for wholesale access to Telstra’s legacy copper network to provide services. The decision slight revises the regulator’s draft ruling in June for a 9.6 per cent fall.

Any increase or decrease in access pricing is likely to have a direct impact on the cost of phone and internet bills for Australians who access the network.

Telstra had argued that a downturn in usage brought on by customers switching to the National Broadband Network had forced it to charge remaining customers more money for the same level of service.

Telstra said in a statement it was bitterly disappointed with the ACCC decision and indicated it may well appeal the result.

ACCC chairman Rod Sims said lower expenditure costs, cheaper access to credit and updated information from the NBN rollout had led to downward pressure on the price setting, more than offsetting the upward price pressures brought on by the shrinking fixed-line telecommunications market.

“Our final decision on prices is the result of a number of considerations, with downward pressures more than offsetting upward pressures,” Mr Sims said.

“Importantly, users of Telstra’s network should not pay the higher costs that result from fewer customers as NBN migration occurs,” he said.

“If there is no adjustment for these higher costs, then customers who have not yet been migrated to the NBN will ultimately pay significantly higher prices.”

The ACCC said customers were not to blame for the shift away from the copper network.

“The ACCC has taken this approach because it considers that users of the fixed line network have not caused the asset redundancy and under-utilisation,” Mr Sims said.

The ACCC’s final decision also covers connection and disconnection charges and a decision to not exempt the CBD areas from coverage under the final access determinations.

The new pricing will apply from the start of November through to the end of June 2019.

Business Spectator