The Australian Competition and Consumer Commission (ACCC) will not factor in payments made to Telstra by NBN Co in setting the prices of Telstra’s wholesale fixed-line services.Telstra and NBN Co are currently negotiating an $11 billion deal to help build the NBN, with the competition regulator today stating these payments will not be considered in determining charges.
Competitors such as Optus have argued the payments should be taken into consideration, while Optus chairman Paul O’Sullivan has called for legislation to be introduced to split Telstra amid the rollout of the NBN.
Telstra has asked the ACCC to raise wholesale charges by 7.2 per cent, stating the price rise is necessary for building and maintaining its fixed-line network.
“We have identified the arrangements regarding the migration of customers to the NBN and the use of Telstra’s assets by NBN Co as key issues in setting prices for declared services”, ACCC chairman Rod Sims stated.
“The ACCC will use the regulatory value of Telstra’s assets, not the higher payments agreed between Telstra and NBN Co in their Definitive Agreements, to adjust the cost base for NBN effects when determining regulated charges.
“This is a straightforward matter and our approach accords with common regulatory practice.”
Sims added the ACCC’s position involves the same regulatory principles involved when one business buys regulated assets from another.
“If regulated prices were adjusted up to reflect an asset sale price above the regulatory value of the assets, this would result in price increases due solely to ownership change and not to changes in underlying costs – this outcome would clearly not be in consumers’ interests,” he commented.
“Further, if values in excess of regulatory values were deducted from a businesses’ cost base, as some stakeholders have suggested, we could reach a future point where regulated asset values become negative. This would clearly be a nonsensical outcome.”