Trade Practices Act 1974 Pricing principles pursuant to section 152AQA (Cth)

TRADE PRACTICES ACT 1974

Section 152AQA

Pricing principles for the Local Carriage Service, Wholesale Line Rental Service and Public Switched Telephone Originating and Terminating Access Services

The Australian Competition and Consumer Commission determines, pursuant to section 152AQA of the Trade Practices Act 1974 (the Act), that the pricing principles and price-related terms and conditions specified in the Schedules are to apply to the following services declared by the Commission under section 152AL of the Act:

(a)        the Local Carriage Service;

(b)        the Wholesale Line Rental Service; and

(c)        the Public Switched Telephone Originating and Terminating Access Services

Note: For the effect of this determination, see subsection 152AQA(6) of the Act.

Made by the Australian Competition

and Consumer Commission on

29 November 2006

[G J Samuel]

-----------------------------------------

Graeme Samuel

Chairman

SCHEDULE 1 – Local Carriage Service (LCS)

Part 1 – Pricing Principles

An interim retail-minus-retail-costs (“RMRC”) pricing principle should be adopted until such time as the Commission has a robust cost model available.  In implementing the interim RMRC pricing principle, the Commission will use:

Ÿ          avoidable retail costs for the LCS rather than avoided retail costs

Ÿ          unbundled benchmark retail prices

Ÿ          separate pricing of the LCS.

The Commission will seek to implement a cost-based pricing approach once a robust cost model, capable of producing reliable estimates of costs in all geographic regions, is available.

Part 2 – Price-related terms and conditions

Local Calls
Telstra Retail Prices	20c ex GST
Unit Avoidable Retail Costs	2.29c/call
GST Adjustment	0.21c
Indicative Price	17.92c

SCHEDULE 2 – Wholesale Line Rental Service (WLR)

Part 1 – Pricing Principles

An interim retail-minus-retail-costs (“RMRC”) pricing principle should be adopted until such time as the Commission has a robust cost model available.  In implementing the interim RMRC pricing principle, the Commission will use:

Ÿ          avoidable retail costs for the WLR rather than avoided retail costs

Ÿ          unbundled benchmark retail prices

Ÿ          separate pricing of the WLR.

The Commission will seek to implement a cost-based pricing approach once a robust cost model, capable of producing reliable estimates of costs in all geographic regions, is available.

Part 2 – Price-related terms and conditions

HomeLine Part	BusinessLine Part
Telstra Retail Prices	$29.05	$31.77
Unit Avoidable Retail Costs	$5.93/mth	$5.93/mth
Indicative Price	$23.12	$25.84

SCHEDULE 3 –   Public Switched Telephone Originating and Terminating Access Services (PSTN OTA)

Part 1 – Pricing Principles

The price of the PSTN OTA Service should be determined on the basis of total service long run incremental cost (“TSLRIC”).

Part 2 – Price-related terms and conditions

Disaggregated indicative prices for PSTN OTA services in 2006-07

2006-07	Flagfall	EMOU charge	Headline rate
CBD	0.85	0.35	0.57
Metropolitan	0.84	0.49	0.70
Provincial	0.94	0.68	0.91
Rural	2.06	3.66	4.18
Average	0.95	0.76	1.00