The Australian Competition and Consumer Commission (ACCC) on Monday proposed a 9.6% cut in Telstra’s wholesale access prices.
As customers migrate from the incumbent’s legacy copper network to the national broadband network (NBN), the efficiencies of serving large numbers of end users are progressively lost.
This is why in October 2014 Telstra asked the ACCC for permission to increase wholesale prices by 7.2% from 2015 to reflect this diminishing economy of scale.
However, "users of Telstra’s network should not pay the higher costs that result from fewer customers as NBN migration occurs. If there is no adjustment for these higher costs then customers who have not been migrated to the NBN will pay significantly higher prices for copper-based services," said ACCC chairman Rod Sims, in a statement.
"Eventually these prices would reach absurd levels for the unlucky last copper customers," he said.
Telstra said in a Sydney Morning Herald report that it was disappointed by the ACCC’s draft decision, adding that its A$11 billion deal to either decommission its copper network or transfer it to NBN for use in its fibre-to-the-node (FTTN) network "does not account for costs incurred on our legacy network in the switch to the NBN."
"Telstra had the opportunity in its negotiations with NBN to ensure that it received consideration for the effects of service migration, including the costs associated with the loss of economies of scale and asset redundancy," Sims insisted.
The regulator will seek industry feedback until 17 July with a view to finalising its decision by the end of September. The new rules will take effect on 1 October and will apply until June 2019.
