From futility to utility - recent developments in fixed line access pricing

Recent developments in Australia have seen the telecommunications regulator, the Australian Competition and Consumer Commission (ACCC), propose to step away from the use of hypothetical cost models to set access prices for Telstra’s fixed line network, and move towards a ‘utility style’ framework based on the recovery of historically-incurred costs. The ACCC has been bolstered by a recent decision from the review body, the Australian Competition Tribunal, which cast doubt on the adequacy of Telstra’s modelling of hypothetical costs. The implications of the shift are profound for Telstra, but could also be significant for other regulated entities including mobile operators and the new national broadband company NBN Co.