On 8 December 2011, the ACCC issued its final access
determination in relation to MTAS pricing, reducing the regulated
price further from 6 to 3.6cpm over the period to 30 June
WHAT IS NEW?
The ACCC has just issued its final access determination on the
pricing of the mobile termination access service (MTAS). In its
determination, the ACCC has set threshold prices that operators can
charge for the service from 2012 to 30 June 2014. As in previous
years the ACCC has set a glide path for the cost reductions,
6 cpm for the calendar year 2012
4.8 cpm for the calendar year 2013
3.6 cpm to 1 January to 30 June 2014
The ACCC came to the view that its past pricing models were
outdated and therefore adjusted the result produced from the 2007
WIK study to take into consideration international comparative
analysis and the emergence of LTE technology.
Performing a meaningful international comparative analysis on
MTAS pricing is fraught with difficulties. First, other than New
Zealand, no other country uses a similar pricing model. Secondly,
most other developed countries have greater take-up of 3G services,
both in proportionate and absolute terms. Finally, there is the
perennial problem of Australia's vast land mass and low
One of the reasons for the ACCC adjusting the WIK model cost
downwards was the development of LTE technology. The ACCC
considered that it was reasonable to assume that the hypothetical
efficient operator would use LTE, as it is a proven technology in
the Australian context now that it has been adopted by NBN Co for
the fixed wireless component of the NBN. Given the relatively early
stages of the NBN rollout, this is an interesting approach for the
WHAT HASN'T CHANGED?
Unlike its new approach to the fixed network, the ACCC has
continued to price MTAS using a total service long run incremental
cost plus model (TSLRIC+) with an allocation for fixed and common
costs. This is a forward looking model that prices by estimating
future (efficient) costs; assuming that as technology becomes more
efficient, costs decrease due to operational efficiencies and
economies of scale. These costs were originally based on the 2007
WIK model, an expert report commissioned on behalf of the ACCC.
An enduring criticism of MTAS regulation is the perceived
distortionary effect created by the lack of regulation of fixed to
WHAT DOES THIS MEAN?
The ACCC's decision signals that it is prepared to take an
aggressive approach to pricing and regulation and is prepared to
regulate prices without undergoing a time consuming and expensive
cost modelling process, even where the existing models have
arguably been superseded. It will be interesting to see whether the
ACCC adopts this approach if it opens a declaration inquiry into
the provision of wholesale ADSL. The previous inquiry was abandoned
in April this year but the media release issued by the ACCC when
the revised Structural Separation Undertaking was received from
Telstra last week contains a statement from the Chairman suggesting
that it may be reopened:
"However, it has become apparent through this and other
processes that there are outstanding regulatory concerns in
relation to wholesale ADSL services."1
WHAT IS MTAS?
When you use your mobile to call someone on their mobile, the
service of "handing over" the call to the receiving
party's mobile network is called MTAS. Generally speaking, the
receiving party's mobile network operator charges the calling
party's mobile network operator to "hand over" the
call. MTAS is set in cpm, or cents per minute.
The Sportscraft refunds and returns policy limitations went beyond consumer's rights under the Australian Consumer Law.
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