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(}{\pntxta )}}{\*\pnseclvl7\pnlcrm\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl8 \pnlcltr\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl9\pnlcrm\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}\pard\plain \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid8592682 \fs24\lang3081\langfe1033\cgrid\langnp3081\langfenp1033 {\b\insrsid1508957 AUSTRALIAN COMPETITION AND CONSUMER COMMISSION \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1508957 {\b\insrsid5444178 \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid8592682 {\b\insrsid1508957 LOCAL SERVICES REVIEW \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1508957 {\b\insrsid5444178 \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid8592682 {\b\insrsid1508957 DRAFT DECISION MARCH 2006 \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1508957 {\b\insrsid5444178 \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid8592682 {\ul\insrsid5444178 COMPETITIVE CARRIERS}{\ul\insrsid2754437 \rquote }{\ul\insrsid5444178 COALITION }{\ul\insrsid2754437 (CCC) }{ \ul\insrsid1508957\charrsid5444178 SUBMISSION \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1508957 {\b\insrsid1508957 \par \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid8592682 {\ul\insrsid1508957\charrsid5444178 Background \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13517250 {\insrsid1508957 \par On 22 April 2005 the Australian Competition and Consumer Commission (}{\insrsid7630490 the Commission}{\insrsid1508957 ) commenced a public inquiry to review the Local Carriage }{\insrsid7630490 Service (LCS) declaration. The Commission}{\insrsid5444178 subsequently}{\insrsid1508957 released its draft decision in March 2006 and has called for submissions to that draft decision. }{\insrsid5444178 \par \par The Competitive Carriers}{\insrsid2754437 \rquote }{\insrsid5444178 Coalition (the CCC)}{\insrsid1508957 is pleased to have the opportunity to submit its views on the Commission\rquote s draft decision. \par \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid8592682 {\ul\insrsid1508957\charrsid5444178 Summary \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13517250 {\insrsid1508957 \par }{\insrsid5444178 The CCC}{\insrsid1508957 supports the}{\insrsid5444178 Commission\rquote s recommendations}{\insrsid1508957 : \par \par {\listtext\pard\plain\f10\lang3081\langfe1033\langfenp1033\insrsid5444178 \loch\af10\dbch\af0\hich\f10 \'a7\tab}}\pard \qj \fi-360\li720\ri0\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1 \pnrauth1\pnrdate-2036016445\pnrstart0\pnrxst1\pnrxst0\pnrxst167\pnrxst240\pnrstop4\pnrstart1\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrstop9\pnrstart2\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23 \pnrnfc23\pnrnfc23\pnrnfc0\pnrnfc0\pnrnfc1\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrstop18\pnrstart3\pnrpnbr1\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0 \pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrstop36\adjustright\rin0\lin720\itap0\pararsid13517250 { \insrsid5444178 To c}{\insrsid1508957 ontinue declaration of LCS}{\insrsid5444178 ;}{\insrsid1508957 \par }\pard \qj 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\pnrnfc23\pnrnfc23\pnrnfc0\pnrnfc0\pnrnfc3\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrstop18\pnrstart3\pnrpnbr3\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0 \pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrstop36\adjustright\rin0\lin720\itap0\pararsid13517250 { \insrsid1508957 That any ex ante determination based on the service description to effect withdrawal of regulation is impractical and problematic}{\insrsid5444178 ;}{\insrsid1508957 \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid5444178 {\insrsid5444178 \par {\listtext\pard\plain\f10\lang3081\langfe1033\langfenp1033\insrsid1508957 \loch\af10\dbch\af0\hich\f10 \'a7\tab}}\pard \qj \fi-360\li720\ri0\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1 \pnrauth1\pnrdate-2036016445\pnrstart0\pnrxst1\pnrxst0\pnrxst167\pnrxst240\pnrstop4\pnrstart1\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrstop9\pnrstart2\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23 \pnrnfc23\pnrnfc23\pnrnfc0\pnrnfc0\pnrnfc4\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrstop18\pnrstart3\pnrpnbr4\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0 \pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrstop36\adjustright\rin0\lin720\itap0\pararsid13517250 { \insrsid1508957 That continued declaration of the LCS under current market conditions will encourage efficient investment in infrastructure}{\insrsid5444178 ; \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid5444178 {\insrsid5444178 \par {\listtext\pard\plain\f10\lang3081\langfe1033\langfenp1033\insrsid5444178 \loch\af10\dbch\af0\hich\f10 \'a7\tab}}\pard \qj \fi-360\li720\ri0\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid13517250 { \insrsid5444178 That }{\insrsid1508957 Telstra\rquote s incentives to invest in replacement technologies will not be unduly effected by continued regulation provided the pricing approach does not lead to under-recovery or over-recovery of costs}{ \insrsid5444178 , and;}{\insrsid1508957 \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid5444178 {\insrsid5444178 \par {\listtext\pard\plain\f10\lang3081\langfe1033\langfenp1033\insrsid1508957 \loch\af10\dbch\af0\hich\f10 \'a7\tab}}\pard \qj \fi-360\li720\ri0\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1 \pnrauth1\pnrdate-2036016445\pnrstart0\pnrxst1\pnrxst0\pnrxst167\pnrxst240\pnrstop4\pnrstart1\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrstop9\pnrstart2\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23 \pnrnfc23\pnrnfc23\pnrnfc0\pnrnfc0\pnrnfc5\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrstop18\pnrstart3\pnrpnbr5\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0 \pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrstop36\adjustright\rin0\lin720\itap0\pararsid13517250 { \insrsid1508957 That continued regulation will enable service providers to make efficient decisions about when to deploy infrastructure}{\insrsid5444178 .}{\insrsid1508957 \par }\pard \qj \li360\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin360\itap0\pararsid8002842 {\insrsid8002842 \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid8002842 {\insrsid5444178 Whilst the CCC}{\insrsid1508957 acknowledges that technological and market developments necessitate a somewhat iterative approach to declaration}{\insrsid7614454 , it believes that a two year peri}{\insrsid5444178 od is too short. Rather, the CCC}{\insrsid7614454 believes a better approach is to extend declaration until 2010 and to use the exemption provisions to remove, amend or wind back regulation where it is deemed competition is fully effective}{\insrsid5444178 .}{\insrsid1508957 \par }\pard \qj \li360\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin360\itap0\pararsid13517250 {\insrsid1508957 \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13517250 {\insrsid5444178 The CCC}{\insrsid1508957 also suppo}{\insrsid5444178 rts the Commission\rquote s decision}{\insrsid1508957 : \par \par {\listtext\pard\plain\f10\lang3081\langfe1033\langfenp1033\insrsid5444178 \loch\af10\dbch\af0\hich\f10 \'a7\tab}}\pard \qj \fi-360\li720\ri0\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls2\adjustright\rin0\lin720\itap0\pararsid8002842 { \insrsid5444178 To d}{\insrsid1508957 eclare a wholesale line rental service}{\insrsid5444178 ;}{\insrsid8002842 \par {\listtext\pard\plain\f10\lang3081\langfe1033\langfenp1033\insrsid5444178 \loch\af10\dbch\af0\hich\f10 \'a7\tab}}\pard \qj \fi-360\li720\ri0\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls2 \pnrauth1\pnrdate-2036016445\pnrstart0\pnrxst1\pnrxst0\pnrxst167\pnrxst240\pnrstop4\pnrstart1\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrstop9\pnrstart2\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23 \pnrnfc23\pnrnfc23\pnrnfc0\pnrnfc0\pnrnfc2\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrstop18\pnrstart3\pnrpnbr2\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0 \pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrstop36\adjustright\rin0\lin720\itap0\pararsid13517250 { \insrsid5444178 That }{\insrsid1508957 declaring a line rental service will promote competition in downstream retail markets}{\insrsid5444178 ;}{\insrsid1508957 \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid5444178 {\insrsid5444178 \par {\listtext\pard\plain\f10\lang3081\langfe1033\langfenp1033\insrsid5444178 \loch\af10\dbch\af0\hich\f10 \'a7\tab}}\pard \qj \fi-360\li720\ri0\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls2 \pnrauth1\pnrdate-2036016445\pnrstart0\pnrxst1\pnrxst0\pnrxst167\pnrxst240\pnrstop4\pnrstart1\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrstop9\pnrstart2\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23 \pnrnfc23\pnrnfc23\pnrnfc0\pnrnfc0\pnrnfc3\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrstop18\pnrstart3\pnrpnbr3\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0 \pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrstop36\adjustright\rin0\lin720\itap0\pararsid13517250 { \insrsid5444178 That declaration will provide}{\insrsid1508957 greater certainty to access seekers on wholesale pricing for a line rental service}{\insrsid5444178 , and;}{\insrsid1508957 \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid5444178 {\insrsid5444178 \par {\listtext\pard\plain\f10\lang3081\langfe1033\langfenp1033\insrsid5444178 \loch\af10\dbch\af0\hich\f10 \'a7\tab}}\pard \qj \fi-360\li720\ri0\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls2 \pnrauth1\pnrdate-2036016445\pnrstart0\pnrxst1\pnrxst0\pnrxst167\pnrxst240\pnrstop4\pnrstart1\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrrgb0\pnrstop9\pnrstart2\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23\pnrnfc23 \pnrnfc23\pnrnfc23\pnrnfc0\pnrnfc0\pnrnfc4\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrnfc0\pnrstop18\pnrstart3\pnrpnbr4\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0 \pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrpnbr0\pnrstop36\adjustright\rin0\lin720\itap0\pararsid13517250 { \insrsid5444178 That l}{\insrsid1508957 ine rental declaration will provide access seekers with far greater flexibility to differentiate competitive services}{\insrsid5444178 .}{\insrsid1508957 \par }\pard \qj \li360\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin360\itap0\pararsid13517250 {\insrsid1508957 \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13517250 {\insrsid5444178 The CCC}{\insrsid1508957 believes that the pricing for the LCS and the wholesale line rental servi}{\insrsid5444178 ce s hould be cost based. The CCC}{\insrsid1508957 therefore welcomes the Commission\rquote s proposal to develop an independent cost model with a view to impleme}{\insrsid5444178 nting cost based prices. The CCC}{\insrsid1508957 would urge the Commission to move quickly to the development of such a model in order to quickly assess the appropriateness of cost based pricing and avoid any pricing distortions currently likely with retail minus pricing methodologies. \par \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid8592682 {\ul\insrsid1508957\charrsid5444178 Specific Arguments \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13517250 {\insrsid1508957 \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid8592682 {\i\insrsid1508957 Declaration will}{\i\insrsid7614454 P}{\i\insrsid1508957 romote }{\i\insrsid7614454 E}{\i\insrsid1508957 fficient}{ \i\insrsid7614454 I}{\i\insrsid1508957 nfrastructure }{\i\insrsid7614454 C}{\i\insrsid1508957 ompetition}{\insrsid1508957 \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13517250 {\insrsid1508957 \par }{\insrsid5444178 The CCC}{\insrsid1508957 contends that the LCS has provided an effective \'93rung\'94 on the competitive ladde}{\insrsid5444178 r of investment. Although }{\insrsid1508957 a bundled local call line re}{\insrsid7630490 ntal service only is uneconomic}{\insrsid1508957 }{\insrsid5444178 the CCC believes that}{\insrsid7630490 ,}{\insrsid5444178 }{\insrsid7630490 to the extent it has been effective, }{\insrsid1508957 declaration and regulated access to LCS has allowed competitors to offer a viable bundled service comprised of local calls and l}{\insrsid7630490 ine rental. The CCC}{\insrsid1508957 contends that without declaration of LCS competitors would have significant difficulty in establishing a market presence and establishing a customer base necessary to move on to commercially viable infrastructure based competition. \par \par Hav}{\insrsid7630490 ing said that, the CCC}{\insrsid1508957 has some sympathy for the view that an effective competitive market can be characterised by elements of both service based competition and facility based competition. That is, the aim should not be f}{\insrsid7630490 acility based competition at any}{\insrsid1508957 co}{\insrsid7630490 st}{\insrsid1508957 . Policy makers must remain mindful of the legislative objective which talks in terms of \'93 efficient\'94 infrastructure based competition and investment. Hence, any withdrawal of regulation of these local services must be considered carefully. \par \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid8592682 {\i\insrsid1508957 Declaration of}{\i\insrsid7614454 L}{\i\insrsid1508957 ine }{\i\insrsid7614454 R}{\i\insrsid1508957 ental}{\insrsid1508957 \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13517250 {\insrsid1508957 \par }{\insrsid7630490 The CCC}{\insrsid7614454 reiterates its view }{\insrsid7630490 put in its }{\insrsid7614454 submission to the Commission\rquote s April 2005 discussion paper that line rental should be offered as a separate decla red wholesale service in two forms, namely a \'93strip}{\insrsid8002842 ped}{\insrsid7614454 back\'94 basic access service and a second }{\insrsid7630490 \'93}{\insrsid7614454 voice enabled}{\insrsid7630490 \'94}{\insrsid7614454 basic access service. }{ \insrsid1508957 \par }{\insrsid7614454 \par }{\insrsid7630490 The CCC}{\insrsid7614454 agrees with the Commission\rquote s view that with the exception of the five CBD areas that the wholesale line rental market should be seen as a national market. Fu}{\insrsid7630490 rther and consistent with the CCC}{\insrsid7614454 \rquote }{\insrsid7630490 s}{\insrsid7614454 view rega}{\insrsid7630490 rding declaration for LCS, the CCC}{\insrsid7614454 agrees with the Commission that the exemption process provides a superior mechanis}{\insrsid7630490 m for the regulatory management}{\insrsid7614454 of }{\insrsid7630490 a }{\insrsid7614454 wholesale line rental}{\insrsid7630490 service}{ \insrsid7614454 . \par \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid8592682 {\i\insrsid7614454 Lack of Substitute Infrastructure to Telstra\rquote s Bottleneck Access Network}{\i\insrsid7614454\charrsid7614454 \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13517250 {\insrsid7614454 \par }{\insrsid7630490 The CCC}{\insrsid7614454 contends }{\insrsid8002842 that there would be significant risk in setting regulatory decisions based on the assumption that there will be substitute services to LCS and ba sic access over the short to medium term}{\insrsid7630490 ,}{\insrsid8002842 at least }{\insrsid7614454 in the curre}{\insrsid8007014 nt climate of uncertainty surrounding}{\insrsid7614454 fibre to the node networks and the sustainability of longer}{ \insrsid7630490 term access prices to the ULLS}{\insrsid8002842 .}{\insrsid7614454 \par \par }{\insrsid7630490 The CCC}{\insrsid7614454 strongly supports the Commission\rquote s view that whilst the take up of ULLS services may increasingly be able to act as supply substitutes for line rental}{\insrsid7630490 , that }{\insrsid7614454 any consideration as to the magnitude of that impact on the declaration of line rental rests heavily on current and future projected rates of take up for ULLS}{\insrsid7630490 .}{\insrsid7614454 }{\insrsid7630490 O}{\insrsid7614454 nly when there is clear and demonstrable substitute services for line rental and sustainable competition in that market should regulation be removed. }{\insrsid7630490 \par \par The CCC}{\insrsid7614454 notes here the apparent current slow down by several operators with respect to their ULLS roll out given Telstra\rquote s current undertakings to increase the access price for the service}{\insrsid8007014 , Telstra\rquote s increase in wholesale prices generally}{\insrsid7614454 and other associated existing policy uncertainties around ULLS}{\insrsid7630490 pricing. To this extent the CCC}{\insrsid7614454 agrees with the Commission that for the purposes of market definition ULLS take up is not likely to effectively constrain Telstra\rquote s conduct with respect to the national wholesale line rental market. \par \par }{\insrsid7630490 The CCC}{\insrsid7614454 agrees with the Commission }{\insrsid7630490 that }{\insrsid7614454 the relevant market is the national market for providing local calls to other carriers via the LCS. \line \par }{\i\insrsid7614454 Telstra Remains Unconstrained in the Local Call Services Market}{\insrsid7614454 \par \par }{\insrsid15534644 The CCC}{\insrsid7614454 strongly agrees with the Commission that continued declaration of LCS will assist to constrain the ability of }{\insrsid8007014 Telstra }{\insrsid7614454 to influence competition on the downstre}{ \insrsid15534644 am retail market. Further, }{\insrsid7614454 without declaration of this service it is likely that giv}{\insrsid15534644 en these services are supplied i}{\insrsid7614454 n a wholesale }{\insrsid985121 market which is not currently subject to effective competition }{\insrsid15534644 that }{\insrsid985121 access seekers will either be unable to obtain access to the LCS or obtain access on reasonable terms and conditions.}{\insrsid7614454 \par }{\insrsid985121 \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid8592682 {\i\insrsid985121 Incentives for Efficient Investment in New Infrastructure}{\insrsid985121 \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13517250 {\insrsid985121 \par As the Commission quite rightly notes}{\insrsid15534644 ,}{\insrsid985121 Telstra has announced plans to upgrade its existi ng copper network to a fibre based network. This is a clear indication that existing and continued declaration of LCS will not deter or prevent Telstra from continued investment in this bottleneck service. \par \par Similarly as has been the case to date}{\insrsid15534644 ,}{\insrsid985121 continued declaration of this service which is based on an enduring bottleneck facility }{\insrsid15534644 will }{\insrsid985121 continue to promote competitive facilities based competition. \par \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid8592682 {\i\insrsid985121 Declaration of the Line Rental Service will be in the LTIE}{\insrsid985121 \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13517250 {\insrsid985121 \par For the same reasons that declaration of LCS is in the long term interests of end users, declaration of the line rental service will also be in the LTIE. \par \par As with LCS there is no competition in the wholesale market for the provision of line rental services and hence downstream retail competition is totally reliant upon resale of Telstra\rquote s line rental service. \par \par }{\insrsid15534644 Past and current concerns over anti-competitive behaviour with respect to the provision of Telstra\rquote s line rental service confirm}{\insrsid985121 the need for declaration of the service. It is clear that in the ab sence of declaration of line rental service that Telstra has been able to price the service in such a way that creates significant difficulties for competitors to compete and has raised concerns over alleged anti-competitive price squeeze behaviour. Decl a ration of this service will not only guarantee access to a wholesale line rental service but more importantly will give access seekers certainty over pricing to this bottleneck service and further should assist in preventing anti-competitive pricing behav iour. \par \par }{\insrsid15534644 The CCC}{\insrsid985121 would again note Telstra\rquote s publicly stated position that it intends to upgrade this existing access network to a fibre based network. Declaration of a line rental service in a circuit switched environment will serve as a critical basis for d etermining appropriate access regulation to a fibre network which by its nature will also be a bottleneck facility. \par \par Further the Commission\rquote s stated intention to develop an independent cost model }{\insrsid15534644 for these}{\insrsid985121 services will}{\insrsid15534644 ,}{\insrsid985121 together with declaration}{\insrsid15534644 ,}{\insrsid985121 provide robust investment signal}{\insrsid15534644 s to both Telstra }{\insrsid985121 and to access seekers in relation to efficient network investment. \par \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid8592682 {\i\insrsid985121 LCS and Wholesale Line Rental (WLR) should be Cost Based}{\insrsid985121 \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13517250 {\insrsid985121 \par As per }{\insrsid15534644 its }{\insrsid985121 submission to the Apr}{\insrsid15534644 il 2005 discussion paper, the CCC}{\insrsid985121 contends that Telstra is now fully recovering costs and that therefore pricing of LCS and WLR should be}{ \insrsid15534644 cost based. To this end the CCC}{\insrsid985121 contends that should the Commission determine that Telstra\rquote s PIE II model not be a full forward looking TSLRIC based model then the costs an d pricing outputs for that model should be disregarded. This again underlines the importance of the Commission developing an independe}{\insrsid15534644 nt cost}{\insrsid985121 model of its own. \par \par }{\insrsid15534644 The CCC}{\insrsid985121 contends that under Telstra\rquote s own rebalancing exercise that costs should now be fully recovered and that an access deficit no longer exists, should there in fact have been }{\insrsid8002842 a deficit }{ \insrsid15534644 to begin with. Therefore}{\insrsid985121 TSLRIC costs of providing local calls and line rental should now be below access prices set under the current pricing approach. \par \par }{\insrsid15534644 The CCC}{\insrsid985121 submits that only cost based pricing will provide the necessary platform for product differentiation and value added opportunities together with decreased reliance on the incumbent and }{\insrsid4214046 provide competitors }{\insrsid985121 improved control over their own facilities. \par \par Should the Commission determine that the provisioning costs are ab}{\insrsid13791300 ove retail prices then the CCC}{\insrsid985121 agrees with the Commission that }{\insrsid13791300 a }{\insrsid985121 retail minus approach to access prices should be applied. }{\insrsid8073032 \par \par }{\insrsid985121 As the Commission accurately points out in its draft decision}{\insrsid13791300 ,}{\insrsid985121 Telstra is able to recover this shortfall via universal service levies}{\insrsid13791300 ,}{\insrsid985121 government subsidies and the economic profits earned from the provision o}{\insrsid13791300 f services across its entire network. The CCC}{\insrsid985121 notes here that Telstra is one of the most profitable carriers in th e world operating at around 50% EBITDA margin. It is important to note her}{\insrsid13791300 e that any shortfall due to provisioning costs being}{\insrsid985121 above retail prices is a result of retail price controls and not to do with whether services are declared or not. Hence any impact of retail price controls should not be relevant to whether or not }{\insrsid13791300 the price of }{\insrsid985121 a declared service }{\insrsid13791300 is }{\insrsid5853979 cost based or retail minus}{\insrsid985121 . It is important to note here }{\insrsid5853979 that }{\insrsid985121 the purpose of retail price controls is predominantly one of consumer safeguard and }{\insrsid5853979 is }{\insrsid985121 applied to monopoly service providers as a productivity improvement tool. \par \par Telstra\rquote s ability to recover and possibly over recover its costs is supported by the statement made by Telstra\rquote s Chief Financial Officer }{\insrsid5853979 that \'93\'85the }{\insrsid985121 advent of high speed internet services usin}{ \insrsid5853979 g DSL over copper wires allows}{\insrsid985121 Telstra to pay for its national copper and fibre network a second time}{\insrsid5853979 ..}{\insrsid985121 .}{\insrsid5853979 \'94}{\insrsid985121 Such a }{\insrsid8073032 damming }{ \insrsid11864439 admission}{\insrsid985121 is strong support of the Commission\rquote s view that any determination of cost base prices where retail prices are below costs would require a threshold examination and accounting of Telstra\rquote s revenue sources and more particularly its profitability across the range of services it provides. \par \par }{\insrsid5853979 The CCC}{\insrsid985121 contends that in the absence of a robust independent cost model there will b e never ending debate as to the most appropriate pricing model for access and that therefore the Commission should move as quickly as possible to developing such a model. \par \par }{\insrsid5853979 The CCC}{\insrsid985121 also supports the Commission\rquote s view that a retail minus approach should dedu ct avoidable costs from the starting price and not avoided costs. As the Commission rightly points out using avoided costs would allow Telstra full discretion in the determination of avoided costs. It is clear that the use of avoidable costs will promot e more efficient resellers into the market. \par \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\outlinelevel0\adjustright\rin0\lin0\itap0\pararsid8592682 {\i\insrsid985121 Bundled Versus }{\i\insrsid2754437 Unbundled}{\i\insrsid985121 Starting Prices}{\insrsid985121 \par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid13517250 {\insrsid985121 \par }{\insrsid1271741 For reasons provided in earlier submissions, t}{\insrsid5853979 he CCC}{\insrsid985121 does not support the Commission\rquote s view that the starting price for a retail minus approach should be Telstra\rquote s bu}{\insrsid5853979 ndle d service offerings. The CCC}{\insrsid985121 does however support the Commission\rquote s view that both wholesale line rental and LCS should be priced independently. \par }{\insrsid5853979 \par \par \par ____________________________________________________________________}{\insrsid5853979\charrsid985121 \par }}