Telstra Carrier Charges—Price Control Arrangements, Notification and Disallowance Determination No. 1 of 2001

Commonwealth of Australia

Telecommunications (Consumer Protection and Service Standards) Act 1999

Telstra Carrier Charges—Price Control Arrangements, Notification and Disallowance Determination No. 1 of 2001

I, Richard kenneth robert Alston, Minister for Communications, Information Technology and the Arts, make the following Declaration under subsections 154(1), 155(1) and 157(1) of the Telecommunications (Consumer Protection and Service Standards) Act 1999.

Dated 26 June 2001.

RICHARD ALSTON

Minister for Communications, Information Technology and the Arts

____________

Part 1 Introductory

1 Name of Determination

This Determination is the Telstra Carrier Charges––Price Control Arrangements, Notification and Disallowance Determination No. 1 of 2001.

2 Commencement

This Determination commences on 1 July 2001.

3 Expiry

This Determination expires at the end of 30 June 2002.

4 Interpretation

(1) In this Determination, unless the contrary intention appears:

ACCC means the Australian Competition and Consumer Commission.

Act means the Telecommunications (Consumer Protection and Service Standards) Act 1999.

applicable zone has the same meaning as in section 109 of the Act.

business customer means a customer other than a residential/charity customer.

charging zone means a charging zone specified in the table in attachment 6 to the Telstra Public Switched Telephone Service (PSTS) Section of the document known as the Telstra Standard Form of Agreement as in force or existing from time to time.

community service town has the same meaning as in the Telstra Public Switched Telephone Service (PSTS) Section of the document known as the Telstra Standard Form of Agreement as in force or existing from time to time.

connection means establishing the supply of a standard telephone service at a location required by the person requesting the supply of the service, but does not include:

(a) in respect of a business requesting the service––the supply of materials or services to support the supply of a standard telephone service from a main distribution frame to the location requested by the business; or

(b) the supply and connection of a telephone handset or other customer equipment.

CPI number means the number, expressed as a percentage, that represents the aggregate price movement in the all groups basket of the consumer price index:

(a) for the weighted average of the 8 Australian capital cities for the financial year immediately preceding the financial year in which the relevant price control (if any) is to apply; and

(b) that is based on the number published or, if, at the time the calculation is made, the number has not been published, that is estimated to be the number likely to be published, for that financial year by the Australian Statistician.

designated community service town has the same meaning as in the Agreement for the provision of untimed local calls, untimed Internet access and other carrier services to Extended Zones dated 1 June 2001 between the Commonwealth and Telstra.

digital cellular mobile telephone service means:

(a) telecommunications network access to a public mobile telecommunications service; and

(b) calls made by means of the service;

supplied by digital means.

domestic leased line means the installation and rental of a dedicated carriage service connected to a telecommunications network for communication between distinct places in Australia.

exercising, in relation to a price-cap, means varying a price in such a way as to not exceed the maximum average price permitted by the price-cap.

Extended Zone has the same meaning as in the Agreement for the provision of untimed local calls, untimed Internet access and other carrier services to Extended Zones dated 1 June 2001 between the Commonwealth and Telstra.

first basket of services means the following group of services:

(a) digital cellular mobile telephone services;

(b) connections;

(c) domestic leased lines;

(d) international leased lines;

(e) line rentals;

(f) local calls;

(g) trunk calls;

(h) international calls.

former Determination means the Telstra Carrier Charges––Price Control Arrangements, Notification and Disallowance Determination No. 1 of 2000 made by the Minister on 21 June 2000 and notified in the Gazette on 28 June 2000.

fourth basket of services means the following group of services:

(a) connections charged at residential rates;

(b) line rentals charged at residential rates;

(c) local calls made using a line rental that is charged at residential rates;

(d) trunk calls made using a line rental that is charged at residential rates;

(e) international calls made using a line rental that is charged at residential rates.

GST has the same meaning as in the A New Tax System (Goods and Services Tax) Act 1999.

international call means a call that is:

(a) an operator-connected call between a place in Australia and a place outside Australia; or

(b) a direct-dialled call between a place in Australia and a place outside Australia.

international leased line means the installation and rental of a dedicated carriage service connected to a telecommunications network for communication between a place in Australia and a place outside Australia.

line rental means the ongoing supply of a standard telephone service at a location required by the person requesting the supply of the service, but does not include:

(a) in respect of a business requesting the service––the supply of materials or services to support the supply of a standard telephone service from a main distribution frame to the location requested by the business; or

(b) the supply and connection of a telephone handset or other customer equipment.

local call means an eligible local call as defined by section 106 of the Act.

low-bill residential customer means a residential/charity customer of Telstra who is:

(a) pre-selected to Telstra on the last day of the last billing period for the financial year immediately preceding the price-cap year; and

(b) among the 50 per cent of customers with the lowest telephone bills over that billing period.

national long-distance call means a call dialled directly by a caller and made from a charging zone in the domestic public switched telecommunications network to a telephone service in another charging zone that is not immediately adjacent to the first-mentioned charging zone.

New Tax System changes has the same meaning as in section 75AT of the Trade Practices Act 1974.

payphone has the same meaning as in section 9C of the Act.

price-cap year means the financial year to which a price-cap applies.

public access cordless telecommunications service has the same meaning as in section 26 of the Telecommunications Act 1991 as in force immediately before 1 July 1997.

public payphone means a payphone located in a public place.

public place means a place to which the public usually has access, or usually has access except during particular hours of the day or particular days of the week.

residential/charity customer means:

(a) a residential customer; or

(b) a customer that is:

(i) a charitable body or organisation; or

(ii) a welfare body or organisation.

residential rate means the price for a service that Telstra charges a residential/charity customer.

school means:

(a) a school or similar institution at which full-time primary education or full-time secondary education, or both, is or are provided; or

(b) a school or similar institution at which education is provided that includes full-time primary education or full-time secondary education, or both;

which is accepted for registration as a school by a State or Territory.

second basket of services means the following group of services:

(a) line rentals;

(b) local calls.

third basket of services means the group of services comprising connection services.

trunk call means a call, other than an international call or local call, dialled by a caller and made from a charging zone in the domestic public switched telecommunications network, and includes:

(a) a national long-distance call; and

(b) a call to a public mobile telecommunications service; and

(c) a community call; and

(d) a pastoral call.

using, in relation to a price-cap, means charging the maximum price that is permitted under the price-cap.

(2) In this Determination, unless the contrary intention appears, Australia, carriage service, carriage service provider, carrier, customer cabling, customer equipment, directory assistance services, distinct places, public mobile telecommunications service and telecommunications network have the same meanings as in the Telecommunications Act 1997.

(3) In a formula in this Determination, the expression “CPI-” followed by a numerical figure is taken to mean the CPI number reduced by the value of the figure immediately following the expression.

(4) A reference in this Determination to a standard retail price in relation to an untimed local call is a reference to a price for an untimed local call (other than a call of a kind specified in subclause (5)) that Telstra charges a customer, other than a customer who agrees, or has agreed, to an alternative charge rate offered by Telstra.

(5) For the purposes of subclause (4), the following kinds of calls are specified:

(a) a neighbourhood call;

(b) a public creditphone local call;

(c) a commercial credit card local call;

as defined in the Telstra Public Switched Telephone Service (PSTS) Section of the document known as the Telstra Standard Form of Agreement as in force or existing from time to time.

(6) For the purposes of this Determination, a local call is untimed if the charge for the call is worked out regardless of how long the call lasts.

5 Alteration in value of service

For the purposes of this Determination, and without limiting the ordinary meaning of “alteration” or “movement” in relation to a price:

(a) the price charged for a service may be taken by the ACCC to have increased if:

(i) the value of the service reduces because of an alteration made by Telstra to the quality of the service or the provision of the service; and

(ii) the ACCC considers that an effect of the reduction in the value of the service is a circumvention of the operation of the Act to control price increases; and

(b) the price charged for a service may be taken by the ACCC to have decreased if the value of the service increases because of an alteration in the quality of service or the provision of the service.

6 No application to a carrier charge for a carriage service or facility supplied to another carrier or carriage service provider

This Determination does not apply to a charge for a carriage service or facility supplied by Telstra to another carrier or carriage service provider.

Part 2 Carrier charges subject to price control arrangements

7 Carrier charges subject to price control arrangements

(1) For the purposes of subsection 154(1) of the Act, carrier charges for the following services are subject to price control arrangements:

(a) digital cellular mobile telephone services;

(b) connections;

(c) domestic leased lines;

(d) international leased lines;

(e) line rentals;

(f) local calls;

(g) trunk calls;

(h) international calls.

(2) The services listed in subclause (1) do not include:

(a) maritime mobile services (including the services known as “Inmarsat services” or “Seaphone services”); or

(b) the services known as “Radphone services”; or

(c) public access cordless telecommunications services.

Part 3 Price control arrangements

Division 1 Price-cap arrangements

8 Application of price-caps

The price movement over each financial year of:

(a) the first basket of services referred to in column 2 of item 1 of the Schedule; or

(b) the second basket of services referred to in column 2 of item 2 of the Schedule; or

(c) the third basket of services referred to in column 2 of item 3 of the Schedule; or

(d) the fourth basket of services referred to in column 2 of item 4 of the Schedule;

is subject to a price-cap equal to the price movement specified in column 3 of the relevant item.

9 Calculation of price movement

(1) Subject to subclauses (3) and (5), a price movement for:

(a) the first basket of services; or

(b) the second basket of services; or

(c) the third basket of services;

is taken to be the sum of the movements in the prices of each component product of the services in the relevant basket, being a product that is marketed as a discount package or as a standard service, from the price for that product at the end of the financial year immediately preceding the price-cap year (where the movement in price of each product is weighted by the revenue derived from that product in the price-cap year against the revenue derived from the relevant basket in that year).

(2) Subject to subclauses (3) and (5), a price movement for the fourth basket of services is taken to be the sum of movements in the prices of each component product of the services in that basket, being a product that is marketed as a discount package or as a standard service, from the price for that product at the end of the financial year immediately preceding the price-cap year (where the movement in price of each product is weighted by the revenue derived from sales of that product to low-bill residential customers in the price-cap year against the revenue derived from sales of the fourth basket of services to low-bill residential customers in that year).

(3) In calculating a price movement for the relevant basket, any net increase in the price of a component product of the services in the basket that is attributable to the New Tax System changes is to be disregarded.

(4) In subclause (3), the reference to a net increase is a reference to an increase:

(a) as a result of the net impact of the New Tax System changes from 1 July 2000; and

(b) ascertained in accordance with guidelines (if any) formulated by the ACCC and in force under section 75AV of the Trade Practices Act 1974.

(5) In calculating a price movement for the relevant basket, any price movement attributable to the operation of, and to the extent necessary to comply with, subclause 12(2), (3), (4) or (5) is to be disregarded.

(6) The value of a price movement in a financial year in relation to the relevant basket may be determined in accordance with a methodology (if any) developed by the ACCC in consultation with Telstra.

(7) In developing a methodology under subclause (6), the ACCC must have regard to the objective that, so far as is practicable, the impact on Telstra, its business customers and its residential/charity customers of provisions of this Determination is no greater, nor less than it would have been in the absence of the New Tax System changes, except that:

(a) with the introduction of the GST, a standard retail price for untimed local calls is not to increase because of the GST, but instead Telstra must reduce the GST exclusive price for such calls so that with GST the price for such calls is equal to or less than it was immediately before 1 July 2000; and

(b) Telstra must not increase the prices of any other services for the purpose of recovering the revenue forgone as a consequence of the operation of paragraph (a); and

(c) Telstra must not reduce price reductions it otherwise would have been required to make as a result of the Determination for the purpose of recovering the revenue forgone as a consequence of the operation of paragraph (a).

(8) A methodology developed by the ACCC under subclause (6) may also set out how specified provisions of this Determination are to apply.

(9) The specified provisions of the Determination referred to in subclause (8) will apply in accordance with the methodology developed by the ACCC under subclause (6).

10 Errors in calculating a price movement

(1) Subject to subclause (2), if:

(a) the value of a price-cap that is to apply in a financial year to:

(i) the first basket of services; or

(ii) the second basket of services; or

(iii) the third basket of services; or

(iv) the fourth basket of services;

is found to be incorrect because of an error in the value of the price movement of that basket that was determined for the previous financial year under subclause 9(6); and

(b) the value of the incorrect price-cap is less than, or greater than, the value of the correct price-cap by more than 1 percentage point;

the correct price-cap applies instead of the incorrect price-cap.

(2) If it is too late in the financial year to which the correct price-cap applies for Telstra to be reasonably able to give full effect to that price-cap, the price-cap (if any) for the relevant basket for the next following financial year is varied by the amount of the difference between the incorrect price-cap and the correct price-cap.

11 Calls in relation to the Extended Zones

(1) On or after 31 July 2001 Telstra must charge for calls:

(a) between customers within an Extended Zone; and

(b) between a customer in an Extended Zone and a customer in an adjacent Extended Zone;

at an untimed local call rate specified in clause 12 of this Determination.

(2) On or after 31 July 2001 Telstra must charge for calls between:

(a) a customer in an Extended Zone and a customer in the designated community service town for that Extended Zone; and

(b) a customer in an Extended Zone and a customer in the designated community service town of an adjacent Extended Zone;

at a rate of 27.5 cents per 12 minute block of time (or part thereof).

(3) On or after 31 July 2001 Telstra must charge a customer in an Extended Zone no more than the cost of a standard untimed local call to connect to Telstra’s Big Pond Internet service.

12 Untimed local calls

(1) Where Telstra supplies, or offers to supply, or is required to supply, untimed local calls, Telstra must offer a standard retail price for the calls.

(2) Telstra must not charge a price of more than 40 cents for each local call made from a public payphone if the charge for the call is worked out regardless of how long the call lasts.

(3) Telstra must not charge a price of more than 22 cents for each local call (other than a local call made from a public payphone) if the charge for the call is worked out regardless of how long the call lasts.

(4) Subclause (3) does not apply to a local call made using a product or arrangement of a kind referred to in paragraph 21(1)(a) of this Determination that Telstra has made available provided the price of such a call does not exceed 25 cents.

(5) On or after 1 July 2000, Telstra must ensure that the standard retail price of an untimed local call inclusive of GST is equal to or less than the standard retail price of an untimed local call immediately before 1 July 2000.

(6) The average price charged by Telstra to residential/charity customers in non-metropolitan areas for untimed local calls made in the 2000/2001 financial year must not exceed the average price charged by Telstra to residential/charity customers in metropolitan areas for untimed local calls made in the 1999/2000 financial year.

(7) Telstra will be taken to have complied with subclause (6) if the average price charged by Telstra to residential/charity customers in non-metropolitan areas for untimed local calls made in the 2000/2001 financial year does not exceed the average price charged by Telstra to residential/charity customers in metropolitan areas for untimed local calls made in the 1999/2000 financial year by 0.4 per cent.

(8) Subject to subclause (21), the average price charged by Telstra to residential/charity customers in non-metropolitan areas for untimed local calls made in the 2001/2002 financial year must not exceed the average price charged by Telstra to residential/charity customers in metropolitan areas for untimed local calls made in the 2000/2001 financial year.

(9) Telstra will be taken to have complied with subclause (8) if the average price charged by Telstra to residential/charity customers in non-metropolitan areas for untimed local calls made in the 2001/2002 financial year does not exceed the average price charged by Telstra to residential/charity customers in metropolitan areas for untimed local calls made in the 2000/2001 financial year by 0.4 per cent.

(10) The average price charged by Telstra to business customers in non-metropolitan areas for untimed local calls made in the 2000/2001 financial year must not exceed the average price charged by Telstra to business customers in metropolitan areas for untimed local calls made in the 1999/2000 financial year.

(11) Telstra will be taken to have complied with subclause (10) if the average price charged by Telstra to business customers in non-metropolitan areas for untimed local calls made in the 2000/2001 financial year does not exceed the average price charged by Telstra to business customers in metropolitan areas for untimed local calls made in the 1999/2000 financial year by 0.4 per cent.

(12) Subject to subclause (22), the average price charged by Telstra to business customers in non-metropolitan areas for untimed local calls made in the 2001/2002 financial year must not exceed the average price charged by Telstra to business customers in metropolitan areas for untimed local calls made in the 2000/2001 financial year.

(13) Telstra will be taken to have complied with subclause (12) if the average price charged by Telstra to business customers in non-metropolitan areas for untimed local calls made in the 2001/2002 financial year does not exceed the average price charged by Telstra to business customers in metropolitan areas for untimed local calls made in the 2000/2001 financial year by 0.4 per cent.

(14) For the purposes of subclauses (6), (7), (8), (9), (10), (11), (12) and (13), the average price charged by Telstra to residential/charity customers in metropolitan areas for untimed local calls and the average price charged by Telstra to business customers in metropolitan areas for untimed local calls, respectively, are to be calculated using the formula:

Total Telstra untimed local call revenue in metropolitan areas

Total number of Telstra untimed local calls in metropolitan areas

where:

total Telstra untimed local call revenue in metropolitan areas:

(a) in relation to the 1999/2000 financial year, is the sum of Telstra’s charges for untimed local calls in each metropolitan area provided:

(i) in the case of subclauses (6) and (7)––to residential/charity customers; and

(ii) in the case of subclauses (10) and (11)––to business customers; and

(b) in relation to the 2000/2001 and 2001/2002 financial years, is the revenue determined in accordance with a methodology developed by the ACCC in consultation with Telstra; and

total number of Telstra untimed local calls in metropolitan areas is the sum of the number of Telstra untimed local calls in each metropolitan area provided:

(a) in the case of subclauses (6), (7), (8) and (9)––to residential/charity customers; and

(b) in the case of subclauses (10), (11), (12) and (13)––to business customers.

(15) For the purposes of subclauses (6), (7), (8), (9), (10), (11), (12) and (13), the average price charged by Telstra to residential/charity customers in non-metropolitan areas for untimed local calls and the average price charged to business customers in non-metropolitan areas for untimed local calls, respectively, are to be calculated using the formula:

Total Telstra untimed local call revenue in non-metropolitan areas

Total number of Telstra untimed local calls in non-metropolitan areas

where:

total Telstra untimed local call revenue in non-metropolitan areas:

(a) in relation to the 1999/2000 financial year, is calculated by subtracting the total Telstra untimed local call revenue in metropolitan areas from the total Telstra charges for untimed local calls in the whole of Australia provided:

(i) in the case of subclauses (6) and (7)––to residential/charity customers; and

(ii) in the case of subclauses (10) and (11)––to business customers; and

(b) in relation to the 2000/2001 and 2001/2002 financial years, is the revenue determined in accordance with a methodology developed by the ACCC in consultation with Telstra; and

total number of Telstra untimed local calls in non-metropolitan areas is calculated by subtracting the total number of Telstra untimed local calls in metropolitan areas from the total number of Telstra untimed local calls in the whole of Australia provided:

(a) in the case of subclauses (6), (7), (8) and (9)––to residential/charity customers; and

(b) in the case of subclauses (10), (11), (12) and (13)––to business customers.

(16) In determining a methodology for calculating total Telstra untimed local call revenue in metropolitan areas and total Telstra untimed local call revenue in non-metropolitan areas for the 2000/2001 financial year under subclauses (14) and (15), the ACCC must have regard to the objective of excluding from measured revenue the net impact of the New Tax System changes, so that the impact on Telstra of subclauses (8) and (12) is no greater, nor less, than it would have been in the absence of the New Tax System changes, except that:

(a) with the introduction of the GST, a standard retail price for untimed local calls is not to increase because of the GST, but instead Telstra must reduce the GST exclusive price for such calls so that with GST the price for such calls is equal to or less than it was immediately before 1 July 2000; and

(b) Telstra must not increase the prices of any other services for the purpose of recovering the revenue forgone as a consequence of the operation of paragraph (a); and

(c) Telstra must not reduce the price reductions it otherwise would have been required to make as a result of the Determination for the purpose of recovering the revenue forgone as a consequence of the operation of paragraph (a).

(17) In subclause (15), total Telstra untimed local call revenue in metropolitan areas and total number of Telstra untimed local calls in metropolitan areas have the same meaning as in subclause (14).

(18) Subclauses (6), (8), (10), (12), (14) and (15) do not apply to local calls that are:

(a) provided by Telstra to another carrier or carriage service provider; or

(b) made from a public payphone; or

(c) provided to a customer who is an employee of the Telstra group of companies and who is subject to discounts available only to customers who are employees of the Telstra group of companies; or

(d) provided to a customer of a kind described in subsection 183(3) of the Telecommunications Act 1991 as in force immediately before 1 July 1997 and who is subject to discounts that are available to the customer only because he or she is a customer of the kind described in that subsection.

(19) In subclauses (6), (8), (10), (12), (14) and (15), a reference to an untimed local call is a reference to a call the charge for which is worked out regardless of how long the call lasts.

(20) In subclauses (6), (7), (8), (9), (10), (11), (12), (13), (14), (15), (16) and (18):

inter-carrier charge area means a defined geographic area corresponding to a charge district of the same name as defined in Telstra maps CP51, CP53, CP55, CP57, CP59 and CP61 as at the commencement of this Determination (and has the same meaning as the term “charge area” as used in the Telecommunications (Interconnection and Related Charging Principles) Determination No. 1 of 1991 as in force immediately before 1 July 1997).

metropolitan area means the inter-carrier charge area for Sydney, Melbourne, Brisbane, Perth or Adelaide.

non-metropolitan area means any area of Australia other than a metropolitan area.

Telstra group of companies means Telstra Corporation Limited and any other company in which Telstra Corporation Limited holds more than 50 per cent of the issued share capital.

(21) If in the 2000/2001 financial year the average price charged by Telstra to residential/charity customers in non-metropolitan areas for untimed local calls exceeds the price that was charged to residential/charity customers in metropolitan areas in the 1999/2000 financial year then, in relation to the 2001/2002 financial year, the sum of:

(a) the average price charged by Telstra to residential/charity customers in non-metropolitan areas for untimed local calls made in the 2001/2002 financial year; and

(b) an amount equal to the amount by which Telstra failed to comply with subclause (6) in the 2000/2001 financial year; and

(c) the amount referred to in paragraph (b) multiplied by the CPI number for 2000/2001;

must not exceed the average price charged by Telstra to residential/charity customers in metropolitan areas for untimed local calls made in the 2000/2001 financial year.

(22) If in the 2000/2001 financial year the average price charged by Telstra to business customers in non-metropolitan areas for untimed local calls exceeds the price that was charged to business customers in metropolitan areas in the 1999/2000 financial year then, in relation to the 2001/2002 financial year, the sum of:

(a) the average price charged by Telstra to business customers in non-metropolitan areas for untimed local calls made in the 2001/2002 financial year; and

(b) an amount equal to the amount by which Telstra failed to comply with subclause (10) in the 2000/2001 financial year; and

(c) the amount referred to in paragraph (b) multiplied by the CPI number for 2000/2001;

must not exceed the average price charged by Telstra to business customers in metropolitan areas for untimed local calls made in the 2000/2001 financial year.

13 Line rental for schools

If Telstra supplies a school with a standard telephone service, the line rental that Telstra charges the school in relation to the service must not exceed the line rental that Telstra charges its residential/charity customers in relation to the same service.

14 Option to defer a price-cap

(1) If, under this clause, Telstra elects wholly or partly to defer exercising the price-cap (as varied in accordance with this Determination) for:

(a) the first basket of services; or

(b) the second basket of services; or

(c) the third basket of services; or

(d) the fourth basket of services;

to the financial year next following the financial year in which the price-cap would otherwise apply:

(e) the price-cap, or the part of the price-cap, is taken to be so deferred for Telstra; and

(f) the price-cap for the relevant basket of services for the next following financial year is taken to be varied by the unexercised amount of the price-cap so deferred.

(2) The election may be made if:

(a) the financial year to which the price-cap would apply has ended; and

(b) the value of the price movement of:

(i) the first basket of services over the financial year is not greater than the price-cap plus 0.4 percentage points; or

(ii) the second basket of services over the financial year is not greater than the price-cap plus 0.1 percentage points; or

(iii) the third basket of services over the financial year is not greater than the price-cap plus 0.1 percentage points; or

(iv) the fourth basket of services over the financial year is not greater than the price-cap plus 0.1 percentage points; and

(c) the election is not in respect of a price-cap that would otherwise apply in the 2001/2002 financial year.

15 Reporting

Before the end of 3 months after the end of the financial year in which a price-cap applies, Telstra must report, in relation to its compliance with the price-cap (as varied in accordance with this Determination), to the ACCC in accordance with the requirements (if any) specified from time to time by the ACCC:

(a) in a written notice given by the ACCC to Telstra; and

(b) after consultation by the ACCC with Telstra.

16 Credits for not charging the maximum price

(1) If the value of the price movement of:

(a) the first basket of services; or

(b) the second basket of services; or

(c) the third basket of services; or

(d) the fourth basket of services;

over a financial year is less than the price-cap (as varied in accordance with this Determination) for the relevant basket in the financial year, the price-cap for that basket in the next following financial year is taken to be increased by the unused part of the first-mentioned price-cap.

(2) If the value of the price movement of:

(a) the first basket of services; or

(b) the second basket of services; or

(c) the third basket of services; or

(d) the fourth basket of services;

over the 2000/2001 financial year is less than the price-cap under the former Determination for the relevant basket in that financial year, the price-cap for that basket in the 2001/2002 financial year is taken to be increased by the unused part of the price-cap for the 2000/2001 financial year.

17 Reconciliation of price-cap for a basket of services

(1) If:

(a) the value of the price movement of:

(i) the first basket of services; or

(ii) the second basket of services; or

(iii) the third basket of services; or

(iv) the fourth basket of services;

over a financial year is greater than the price-cap (as varied in accordance with this Determination) for the relevant basket in the financial year; and

(b) the difference between the value of the price movement and the price-cap is greater than any part of the price-cap that Telstra has elected to defer exercising;

the price-cap for the relevant basket in the next following financial year is taken to be varied by the unexercised amount of the first-mentioned price-cap.

(2) If:

(a) the value of the price movement of the first basket of services over the 2001/2002 financial year is greater than the price-cap for that financial year (as varied in accordance with this Determination) for that basket plus 0.4 percentage points; and

(b) clauses 7, 8 and 9 continue to apply in the 2002/2003 financial year as if this Determination had not expired;

the price-cap for that basket in the 2002/2003 financial year is taken to be varied by the unexercised amount of price-cap for the 2001/2002 financial year.

(3) If:

(a) the value of the price movement of:

(i) the second basket of services; or

(ii) the third basket of services; or

(iii) the fourth basket of services;

over the 2001/2002 financial year is greater than the price-cap for that financial year (as varied in accordance with this Determination) for the relevant basket plus 0.1 percentage points; and

(b) clauses 7, 8 and 9 continue to apply in the 2002/2003 financial year as if this Determination had not expired;

the price-cap for the relevant basket in the 2002/2003 financial year is taken to be varied by the unexercised amount of the price-cap for the 2001/2002 financial year.

Division 2 Other price control arrangements

18 When the ACCC’s consent is required for proposed alteration to a charge

(1) For the purposes of subsection 156(3) of the Act, the consent of the ACCC is required to a proposed alteration by Telstra to a line rental that is charged at residential rates and is used by one or more lowest-bill residential customers if:

(a) the proposed alteration would increase the carrier charge to a price that is greater, for the service or any component of the service, than the price determined using the formula:

P + (P x CPI number);

where:

P means the price charged for the service, or component, at the end of the financial year preceding the financial year during which the proposed alteration is intended to take effect; or

(b) the proposed alteration:

(i) relates to the service, the carrier charge for which for more than 90 days of the financial year in which the proposed alteration is intended to take effect, has been a price, or prices (except a price charged for not more than 5 consecutive days), lower than the price at the end of the preceding financial year; and

(ii) would increase the charge to a price that is greater than the price determined using the formula:

LPC + (LPC x CPI number);

where:

LPC means the lowest price charged for the service during the financial year in which the proposed alteration is intended to take effect (except a price charged for not more than 5 consecutive days).

(2) In subclause (1):

lowest-bill residential customer means a residential/charity customer of Telstra who is:

(a) pre-selected to Telstra during the period of 30 days prior to the time the proposed alteration is notified to the ACCC; and

(b) among the 10 per cent of customers with the lowest telephone bills at that time.

(3) For the purposes of subsection 156(3) of the Act, the consent of the ACCC is required to a proposed alteration by Telstra to an untimed local call for which a standard retail price is charged if the alteration would result in an increase in that charge.

19 Notice of proposed alteration to be given to the ACCC

If Telstra proposes a price alteration to which the ACCC’s consent is required, Telstra must give the ACCC written notice of the proposal at least 30 days before the alteration is made unless the ACCC has waived the giving of notice.

Note Subsection 156(3) of the Act includes paragraphs that Telstra must comply with in order for Telstra to make a proposed alteration.

20 Information to be included in a notice

A notice must include information that, in the opinion of the ACCC, after consultation with Telstra, will enable the ACCC to assess whether its consent should be given unless:

(a) if no information has been given––the ACCC has waived the giving of the information; or

(b) if some only of the information has been given––the ACCC has waived the giving of the remainder of the information.

21 ACCC to consent or refuse within 30 days

For the purposes of subparagraph 156(3)(c)(ii) of the Act, the period within which the ACCC is required to give or refuse its consent to a proposed alteration is the period of 30 days commencing on the day on which the notice of the proposal is given to the ACCC.

Part 4 Principles applying to alterations to certain charges

22 Principles applying to price alterations for certain line rentals

(1) For the purposes of paragraph 155(1)(b) of the Act, the following principles apply to the making of an alteration to a carrier charge that requires the consent of the ACCC under subclause 18(1) of this Determination:

(a) the alteration must not be made unless the ACCC is satisfied that Telstra has available, or will have available at the time the alteration takes effect, products or other arrangements which, if taken up by affected customers, would ensure that the average telephone bill of lowest-bill residential customers does not increase in real terms; and

(b) for the purposes of the 2001/2002 financial year, a price alteration that is attributable to the New Tax System changes is to be excluded from consideration when the ACCC assesses whether the alteration would lead to an increase in real terms of the average telephone bill of lowest-bill residential customers.

(2) In this clause:

lowest-bill residential customer means a residential/charity customer of Telstra who is:

(a) pre-selected to Telstra at the time of the proposed alteration; and

(b) among the 10 per cent of customers with the lowest telephone bills at that time.

23 Principles applying to certain price alterations for certain untimed local call charges

For the purposes of paragraph 155(1)(b) of the Act, the following principles apply to the making of an alteration to a carrier charge that requires the consent of the ACCC under subclause 18(3) of this Determination:

(a) the alteration must not be made unless the ACCC is satisfied that the proposed alteration is in the long-term interests of end-users of carriage services or of services provided by means of carriage services; and

(b) the alteration must not be made unless the ACCC is satisfied that the proposed alteration is not for the purpose of Telstra reducing the financial cost to Telstra of complying with the policy of the Commonwealth Government that Telstra:

(i) with the introduction of the GST, a standard retail price for untimed local calls is not to increase because of the GST, but instead Telstra must reduce the GST exclusive price for such calls so that with GST the price for such calls is equal to or less than it was immediately before 1 July 2000; and

(ii) Telstra must not increase the prices of any other services for the purpose of recovering the revenue forgone as a consequence of the operation of subparagraph (b)(i); and

(iii) Telstra must not reduce price reductions it otherwise would have been required to make as a result of the Determination for the purpose of recovering the revenue forgone as a consequence of the operation of subparagraph (b)(i).

Part 5 Carrier charges subject to notification and disallowance

24 Specification of charges

For the purposes of section 157 of the Act, charges for the provision of directory assistance services, where such services are required to be provided by subclause 7(1) of Schedule 2 to the Telecommunications Act 1997, are subject to notification and disallowance.

Part 6 2002/2003 Price-caps established to allow carryover of variations

25 Price-caps for the 2002/2003 financial year

Subject to any contrary intention in a determination succeeding this Determination, clauses 7, 8, 9, 12 and 13 of this Determination continue to apply in the financial year immediately following the expiry of this Determination as if this Determination has not expired.

Schedule Price-caps for price movements (Clause 8)