ACCC investigates cost reduction for mobile terminating access services

Updated network and cost model expected on 1 July

Motions are underway for the development of an updated network and cost model for the supply of Mobile Terminating Access Services (MTAS) in Australia, which is expected to come into effect 1 July this year.

The model governs the costs involved in how providers of fixed-line and mobile services allow their customers to call mobile subscribers. The 1 July 2007 update is expected to reign until 30 June 2009, replacing ACCC's current MTAS Pricing Principles Determination, which has been in effect since 1 July 2004.

Currently, cost is shared between the carrier supplying the outbound call and the mobile carrier receiving the call, where the outbound carrier pays the recipient carrier a regulated price for the mobile termination access service.

In accordance with the 2004 MTAS Pricing Principles Determination, the ACCC-regulated price was adjusted in stages from 21 cents per minute in the last half of 2004 to 18 cents per minute from January 2005, 15 cents per minute from January 2006, and finally, the benchmarked target price of 12 cents per minute from January 2007.

As the 12 cent per minute pricing was initially introduced as an upper limit estimate, ACCC is now considering a reduction in price in accordance with a "bottom-up" economic approach being developed for the Australian market by international consultants, WIK-Consult, who were engaged by the ACCC for this purpose in June 2006.

The four incumbent mobile network operators, Telstra, Optus, Vodafone and Hutchison, will be among those who will be affected by the new model, which ACCC Commissioner Ed Willett expects will promote competition in the mobile carrier market.

The ACCC is now calling for submissions from interested parties on issues raised by a discussion paper released last week. Submissions are due by Friday 16 March 2007.

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