EXPLANATORY STATEMENT
Pricing Principles for the Domestic Mobile Terminating Access Service
Trade Practices Act 1974
Legislative Provisions
On 30 June 2004, the Domestic Mobile Terminating Access Service (MTAS) for voice services terminating on all digital mobile telecommunications networks was declared by the Australian Competition and Consumer Commission (the ACCC) under section 152AL of the Trade Practices Act 1974 (the Act).
Subsection 152AQA(1) of the Act provides that the ACCC must, by writing, determine principles relating to the price of access to a declared service. Subsection 152AQA(2) of the Act provides that the determination may also contain price-related terms and conditions relating to access to the declared service. The price-related terms and conditions are typically referred to as “indicative prices”.
Subsection 152AQA(6) of the Act provides that the ACCC must have regard to the determination if it is required to arbitrate an access dispute under Division 8 of the Act in relation to the declared service. However, the pricing principles are not binding on the ACCC. Parties to arbitrations are still able to address the ACCC on the relevance and applicability of the pricing principles to the circumstances of their particular dispute.
The Determination of Pricing Principles for the Domestic Mobile Terminating Access Service is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Purpose
The purpose of the Determination is to inform industry, government and other interested parties of the principles and price-related terms and conditions that are likely to guide the ACCC when considering an access dispute or assessing an undertaking in relation to pricing for the MTAS.
The ACCC considers that the Determination will guide commercial negotiation of access by providing greater certainty regarding the ACCC’s views on reasonable access prices.
Background
The MTAS is a wholesale input, used by providers of fixed-to-mobile and mobile-to-mobile calls, to allow their customers to call mobile subscribers. It allows consumers (either fixed-line or mobile) to call mobile users. If a call made by the carrier's customer terminates on another mobile network, then the carrier pays the other network owner for the mobile termination access service.
The ACCC declared the MTAS on 30 June 2004. The ACCC’s declaration decision is set out in its report Mobile Services Review - Mobile Terminating Access Service – Final Decision, published in June 2004. The report is available on the ACCC’s website at www.accc.gov.au. That same report also contained the ACCC’s consideration of the appropriate pricing principles for the declared MTAS in Chapter 8 and indicative price-related terms and conditions in Chapter 9.
On 30 June 2004, the same time the MTAS was declared, the ACCC also issued a determination under section 152AQA of the Act outlining the principles relating to the price of access to the MTAS and the adjustment path which the price of the MTAS should follow over the period 1 July 2004 to 30 June 2007. That determination expired on 30 June 2007. The declaration for the MTAS does not expire until 30 June 2009.
In June 2007, the ACCC released the Draft MTAS Pricing Principles Determination 1 July 2007 to 31 December 2008 – Report and a draft determination under section 152AQA of the Act. The ACCC sought submissions on the Report and the draft determination to apply to the period from 1 July 2007 to 31 December 2008.
As result of the inquiry, the ACCC made the Determination under section 152AQA relevant for the period 1 July 2007 to 31 December 2008. The ACCC’s analysis regarding the pricing principles and indicative prices that are to apply to the MTAS is set out in Chapter 3 and 1 respectively of the ACCC’s report MTAS Pricing Principles Determination 1 July 2007 to 31 December 2008 – Report, published in November 2007.
Regulation Impact Statement
The ACCC has obtained the advice of the Office of Best Practice Regulation (formerly the Office of Regulation Review) that a Regulation Impact Statement is not required for the Determination.
Consultation
Before making a pricing principles determination, the ACCC is required under subsection 152AQA(4) to publish a draft determination, invite people to make submissions and consider any submissions received within the specified time limit.
In June 2007, the ACCC released the Draft MTAS Pricing Principles Determination (Draft PPD) relevant for 1 July 2007 to 31 December 2008 for public comment. The draft PPD was published on the ACCC’s website www.accc.gov.au and submissions from interested parties were sought at that time.
The ACCC has taken submissions into account in making the Determination. A discussion of the submissions received by ACCC in relation to the Draft PPD is set out in the ACCC’s report MTAS Pricing Principles Determination 1 July 2007 to 31 December 2008 – Report, published in November 2007.
Commencement of Determination
The Determination commences on the day it is made.
Notes on the Determination
The ACCC’s principles relating to the price of access to the declared MTAS are set out in Part 1 of Schedule 1 of the Determination.
The ACCC’s price-related terms and conditions relating to access to the declared MTAS are set out in Part 2 of Schedule 1 of the Determination.