Australia’s second largest ADSL ISP, iiNet, has commission independent economic modelling by Frontier Economics, using the ACCC’s existing cost model, and say access costs for declared fixed line services should fall.
The ISP says costs should fall ‘by almost 17% over the next three years’, and had Frontier Economics ‘calculate charges if the ACCC’s Fixed Line Services Model (FLSM) was rolled forward into the next regulatory period’.
The model was ‘based on Telstra's most recent forecasts for demand, capital expenditure and operational expenditure.’
iiNet’s CEO, David Buckingham, claimed ‘this new modelling by Frontier Economics flew in the face of recent claims by Telstra that wholesale charges should rise.’
He said that: “The Australian public is tired of the incumbent demanding cost increases for access to their ageing copper telephone network, on top of the compensation it will already receive from selling this network to the NBN.
“If averaged over all services declared by the ACCC, Frontier Economics estimates a one-off, 16.9 per cent reduction in charges for the legacy copper network. Those prices would then be held for the following two years of a three-year regulatory period.
“Rather than wholesale costs increasing, our modelling, based on Telstra’s own forecasts of costs and demand, suggests charges should fall considerably,” Mr Buckingham said.
“Telstra's push for an increase in access prices for Declared Services is an attempt to move the goal posts which, if accepted, would lead to a significant and unjustified windfall,” said Buckingham.
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Buckingham concluded that: “The switch to NBN means the incumbent has little, if any, incentive to invest in the legacy copper network while being paid handsomely by NBN Co to migrate services. These facts, along with the fact that migration to the NBN is mandatory, mean the only rational pricing outcome for the Declared Services is that access charges should fall.”
