Trade Practices Act 1974 - Determination under section 152AQA - Pricing Principles for Integrated Services Digital Network

Administered by Department of Communications and the Arts

Legislation au F2008L02180 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

 

 

Pricing Principles for the Integrated Services Digital Network

 

Trade Practices Act 1974

 

Legislative Provisions

 

In November 2007, the Australian Competition and Consumer Commission (Commission) initiated an inquiry into the declaration of the Integrated Services Digital Network (ISDN), in accordance with subsection 152ALA(7) of the Trade Practices Act 1974 (Act).  As a result of that inquiry the Commission decided to extend the declaration of the ISDN Originating Service and the ISDN Terminating Service in regional areas until 30 June 2009, pursuant to section 152ALA of the Act.

 

At the same time, the Commission also made the Pricing Principles for the ISDN (the Determination) in accordance with section 152AQA of the Act.

 

The ISDN is used for the carriage of information such as voice, data, high quality sound, text, still images and video over the public switched telephone network (PSTN). It is a digital communications service which uses the same copper wire lines used for standard telephone services.

 

Subsection 152AQA(1) of the Act provides that the Commission 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.

 

Subsection 152AQA(6) of the Act provides that the Commission 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 Commission. Parties to arbitrations are still able to address the Commission on the relevance and applicability of the pricing principles to the circumstances of their particular dispute.

 

The Determination 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 that are likely to guide the Commission when considering an access dispute or assessing an undertaking in relation to pricing for the ISDN Originating Service or the ISDN Terminating Service.

 

Background

 

In 1997 the Commission determined that deeming the ISDN as a declared service would promote the long term interests of end-users.[1]

 

In June 2005 the Commission issued its final decision following its ISDN services review. The Commission announced the removal of the existing service declaration in CBD and metropolitan areas of capital cities from 30 June 2006. In relation to regional areas, however, the Commission decided that the lack of competition meant the declaration should remain in force until 30 June 2008.[2]

In November 2007 the Commission commenced a public inquiry regarding the declaration of the ISDN. The Commission also sought public comment about the appropriate principles related to the price of access that should apply to the ISDN, should the service continue to be declared. Following the public inquiry, the Commission has made the decision to extend the declaration of the ISDN in regional areas until 30 June 2009. The Commission’s decision and reasons are set out in its June 2008, Final Report on declaring the Digital Data Access and Integrated Services Digital Network Services, which is available on the Commission’s website at www.accc.gov.au.

 

The inquiry also concludes with the making of the Determination. The Commission’s analysis regarding the pricing principles that are to apply to the ISDN is set out in the Commission’s Final Pricing Principles for Declared DDAS and ISDN Services — a guide which is also available from the Commission’s website at www.accc.gov.au.

 

Regulation Impact Statement

 

The Commission 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 determinations made under section 152AQA.

 


Consultation

 

Before making a pricing principles determination, the Commission is required by subsection 152AQA(4) to publish a draft determination, invite people to make submissions and consider any submissions received.

 

On 14 March 2008, the ACCC released its Draft Pricing Principles for declared DDAS and ISDN Services – a guide for comment. Interested parties were provided four weeks within which to make submissions on the ACCC’s preliminary views on the appropriate pricing principles for the ISDN. The ACCC received individual submissions from Telstra and Primus and a joint submission was received from AAPT/PowerTel, Macquarie Telecom, Optus and Primus.

 

The Commission has taken all of these submissions into account in making the Determination.

 

Commencement of Determination

 

The Determination commences on the day after registration.

 


Notes on the Determination

 

The Commission’s principles relating to the price of access to the declared ISDN Originating Service and ISDN Terminating Service are set out in Schedule 1 of the Determination. An explanation of the principles is set out below.

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Schedule 1

The Determination provides that wherever it is reasonably practicable a TSLRIC pricing principle should be applied to the ISDN Originating Service and ISDN Terminating Service.

The TSLRIC approach can be considered by breaking the concept into components:

  • “Total service” refers to the cost of production of an entire service, rather than the cost of a particular unit. The cost is usually expressed on a per-unit basis by dividing by the number of units supplied.
  • “Long run” means that the concept refers to a period where all factors of production can be varied, as opposed to the short run, where the amount of at least one factor of production is fixed.
  • “Incremental cost” means that the concept refers to the additional costs of supplying the service over and above the situation where the service was not supplied, assuming the scale of all other production activities remains unchanged. Strictly speaking, the concept refers to only those costs that can be attributed to the production of the service.

The Determination also provides that where it is not reasonably practicable to set prices on the basis of TSLRIC, the price of the ISDN Originating Service and ISDN Terminating Service should be set having regard to the price of an appropriate benchmark.

A service will be an appropriate benchmark where: (a) it is supplied in a competitive market or it is subject to cost based regulation; and (b) its physical attributes are comparable to the ISDN Originating Service or ISDN Terminating Service in question.

[1]  ACCC, Deeming of Telecommunications Services, June 1997.

[2]  ACCC, DDAS and ISDN Services: Final Report reviewing the declarations for the Digital Data Access and ISDN Services, June 2005, pp. 57-58.

Overview

The Trade Practices Act 1974, enacted by the Parliament of Australia, addresses various issues related to competition and consumer protection within the Australian market. One significant aspect of this Act is the regulation of declared services, which are services that the Australian Competition and Consumer Commission (ACCC) deems to be critical for competition and consumer welfare. In response to an inquiry initiated by the ACCC in November 2007, the Commission extended the declaration of the Integrated Services Digital Network (ISDN) Originating Service and ISDN Terminating Service in regional areas until 30 June 2009, recognising the lack of competition in these areas. Concurrently, the ACCC established Pricing Principles for the ISDN, aiming to guide its decision-making on access disputes or pricing assessments for the ISDN services. The policy objective is to ensure fair and reasonable pricing principles that promote the long-term interests of end-users, thereby maintaining a competitive market environment.

Scope and Application

The Pricing Principles for the Integrated Services Digital Network (ISDN) Determination applies to telecommunications services providers, particularly those offering ISDN services in regional areas, and to the Australian Competition and Consumer Commission (ACCC) as the regulator overseeing compliance and arbitration of access disputes. The determination outlines the principles that should guide the pricing of ISDN services, particularly the Total Service Long-Run Incremental Cost (TSLRIC) approach, or alternatively, the use of an appropriate benchmark if TSLRIC is not reasonably practicable. This Determination extends the declaration of ISDN services in regional areas until 30 June 2009, reflecting the lack of competition in these areas. The jurisdiction of this Determination is federal, as it is made under the Trade Practices Act 1974 and applies nationally. The Determination is not binding on the ACCC, which retains discretion in individual cases, but provides a framework that the ACCC must consider in arbitrating access disputes. The principles are intended to ensure fair and reasonable pricing that aligns with the long-term interests of end-users, particularly in areas where competition is limited.

Key Provisions

The Pricing Principles for the Integrated Services Digital Network (ISDN) set out in the Determination under the Trade Practices Act 1974 (section 152AQA) primarily establish the criteria for pricing of the ISDN Originating Service and ISDN Terminating Service in regional areas. These principles, detailed in Schedule 1 of the Determination, are intended to guide the Australian Competition and Consumer Commission (ACCC) in considering access disputes or assessing undertakings related to pricing for these services. The key principle established is the application of the Total Service Incremental Resource Cost (TSLRIC) pricing principle, where reasonably practicable (Schedule 1). TSLRIC involves considering the total cost of producing an entire service, over a long run period, and the incremental costs of supplying the service. If applying the TSLRIC principle is not feasible, the prices should be set by considering the price of an appropriate benchmark service (Schedule 1). A benchmark service is defined as one supplied in a competitive market or subject to cost-based regulation, with physical attributes comparable to the ISDN service in question. The obligations imposed by the Determination on the parties or entities it governs are primarily informational and procedural. The ACCC must have regard to the pricing principles when arbitrating an access dispute related to the declared ISDN services (section 152AQA(6)). Furthermore, the ACCC is required to publish a draft determination, invite submissions, and consider any submissions received before making a final determination (section 152AQA(4)). The Determination itself mandates that interested parties be provided with a reasonable opportunity to submit comments on the draft principles. These obligations ensure transparency and inclusiveness in the process of establishing pricing principles for the ISDN services. The Determination does not explicitly outline specific offences, penalties, or consequences for breach in its provisions. However, the Trade Practices Act 1974 provides a broader legal framework within which breaches of the principles could be addressed. For instance, section 152ALA of the Act allows the ACCC to arbitrate access disputes, and the pricing principles established in the Determination may influence the outcome of such arbitrations. Although the pricing principles are not binding on the ACCC, they serve as a guide, and parties to arbitrations may still argue the relevance and applicability of these principles to their specific circumstances. Therefore, while there are no direct penalties for breach of the Determination, non-compliance with the principles in arbitrations could potentially lead to unfavourable outcomes for the parties involved.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.