Declaration of telecommunication services

Abstract

[Extract] The access declaration process, instituted by the Telecommunications Act 1997, requires providers of declared telecommunication services to provide competitors with access to those services on fair and equitable terms and conditions. The Act vests the Australian Competition and Consumer Commission (ACCC) with the powers to declare a service in situations where declaration is deemed to promote the long-term interests of end-users. This paper examines the recent declaration of three local telecommunication services - local carriage service, local PSTN originating and terminating service, and unconditioned local loop service.

When considering whether declaration will promote the long-term interests of end-users, s.1S2AB of the Trade Practices Act 1974 directs the Commission to consider whether declaration will: promote competition, any-to-any connectivity and 'the economically efficient use of, and economically efficient investment in, the infrastructure ...' (ACCC, 1999:6).

This paper focuses on aspects of that declaration process arguing primarily that the ACCC has been asked to apply an inappropriate set of tests. The discussion notes that parts of the declaration test are exceedingly difficult to apply and that the sequential nature of the test makes it almost impossible to investigate the sensitivity of results to changes in initial assumptions. The conclusion reached in the paper is that the current tests for declaration should be revised. The paper also notes that cost-benefit analysis can, in theory, overcome many of the problems associated with the current declaration tests. This is not to say that cost-benefit analysis is perfect. It too, suffers from its own set of problems. Nevertheless, it may be able to substantially improve current declaration tests and those involved in the up-coming review.