Telstra ULL Costs

The Situation

The Australian Competition and Consumer Commission (ACCC) is responsible for telecommunications access pricing. As part of the ACCC's recent review process, Telstra (the Australian fixed telecommunications incumbent) constructed a model of the costs of providing unbundled local loops (ULLs) and required a critical review of a similar model constructed for the ACCC, amongst other things.

NERA's Role

NERA Special Consultant Nigel Attenborough was retained by Gilbert + Tobin on behalf of Telstra to produce a series of Expert Reports covering:

  • An independent review of Telstra's TSLRIC model of the costs of ULL;
  • A further independent review focusing on benchmarking of inputs and specific issues relating to the access and core network models built for the ACCC;
  • A full critical review of the core network model built for the ACCC, highlighting a variety of deficiencies relating to the estimation of the required level of capital expenditure on transmission infrastructure;
  • A critical review of the use of international benchmarking for setting charges for duct access and sharing; and
  • A review of the Telstra proposal to use a building block framework to set prices for ULL.

The Result

Reflecting the problems NERA highlighted with its reviews of the ACCC's original model, in July 2011 the ACCC made its Final Access Determinations for fixed line services using a building block approach as proposed by Telstra.