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senator coonan leaves ull pricing to accc Copper action unlikely
Correspondents in Sydney
DECEMBER 14, 2005

THE federal Government said it was unlikely to intervene over the prices Telstra charges rivals to use its copper line network.

Communications Minister Helen Coonan said the government was unlikely to intervene in a decision to be made by the Australian Competition and Consumer Commission (ACCC), despite Telstra's vocal stance against the likely outcome.

"Although no decision has been taken by the government from the public debate at least, it is difficult to conclude that there is an immediate threat to Telstra's capacity to profitably provide services even in regional Australia," Senator Coonan said.

She said it was appropriate that the government leave the decision on Telstra's so-called unbundled local loop (ULL) pricing to the ACCC.

The ULL pricing structure, which determines what Telstra's rivals pay to use its copper network, sets prices in four bands - CBD, metro, regional, and rural and remote.

Australia's biggest telco has said that if ULL prices fall from their current $22 to $13 - one of the price options favoured by the competition regulator for the metro band which is used by 7.5 million people - then it faces an $800 million annual shortfall.

Ms Coonan said the role of government was not to make decisions based on protecting current levels of profit.

"While the detail is being debated and contested, a fundamental point is that government sets the rules but does not normally adjudicate the rules," she said.

However Senator Coonan said the government would make a decision "shortly" on any possible intervention on the ULL decision.

She also said it was inevitable that Telstra would invest in its network, regardless of any ruling by the regulator.

Telstra has threatened to hold off from the investment until it is given the appropriate regulatory backing.

"From my perspective I think it is inevitable that Telstra will invest in the network," Senator Coonan said.

"Telstra is looking for growth opportunities and has identified integrated services, content and applications as the likely source of this growth."

Ms Coonan also said the government would today release two draft determinations of its operational separation rules for the company.

Operational separation will require Telstra to maintain separate retail, wholesale and network business units.

"There will be a pricing tool that establishes internal wholesale pricing arrangements for Telstra to ensure its retail businesses receive no more favourable treatment than its wholesale customers, and Telstra will be required to publish internal contracts setting out non-price terms and conditions," Ms Coonan said.

"Importantly compliance with operational separation will be enforceable by the ACCC and the minister."

Ms Coonan said the two most critical elements of the determinations are those relating to the role for the ACCC and the range of wholesale services covered.

Related links on AustralianIT
December 14 | Telstra denied 'safe harbour'

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