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ACCC drafts local call report

THE AUSTRALIAN Competition and Consumer Commission has issued a draft report on the pricing principles it will generally apply when assessing local carriage service arbitrations and undertakings.

The ACCC is seeking comments on the draft report from interested parties.

LCS is a wholesale service used to re-supply local calls to consumers.

Currently, Telstra supplies nearly all local calls either as a retailer or via resale by its competitors.

Optus also provides the same service to other resellers such as Dingo Blue.

Local call resale is considered the main form of competition in the local telephony market.

ACCC regulatory decisions on local calls should increasingly induce competitors to build more infrastructure or use Telstra’s copper network to supply cheaper local calls.

ACCC chairman Allan Fels said the issuing of LCS principles would increase certainty about the ACCC’s approach to assessing LCS disputes and undertakings.

“It will assist industry to reach commercial agreements on the price of LCS, which is something the ACCC encourages, or in submitting an undertaking to the ACCC,” Professor Fels said.

The ACCC is currently arbitrating four individual disputes regarding the price Telstra charges for LCS.

The parties involved in the disputes against Telstra are Cable & Wireless Optus, Macquarie, Primus and AAPT.

The draft report indicates ACCC will probably use a retail-minus methodology when arbitrating LCS disputes or assessing LCS undertakings.

This involves calculating the LCS price by subtracting the retail costs of supplying local calls from the retail price of a local call.

Professor Fels said the methodology was preferable because it encouraged competition in the retail component of providing a local call service.

“It is consistent with Telstra’s retail price controls,” Professor Fels said.

“Generally, the ACCC will continue to ensure that sustainable facilities-based competition for local calls is encouraged.”

Comments on the draft report will be accepted until 12 May.

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