The Australian Competition and Consumer Commission has directed Telstra to reduce the wholesale prices for its copper network by 9.4 per cent. The final decision by the market watchdog confirms a revision over the earlier expected 9.6 per cent fall. ACCC announced that the new prices will come into effect from Nov. 1, 2015.

Companies such as TPG Telecom and Singtel-Optus rely on Telstra for its fixed line services. While ACCC ordered Telstra to slash its prices, the telecommunication giant had wanted to raise the wholesale prices by 7.2 per cent. The directives issued by the market watchdog would either bring down broadband prices, or allow larger volumes of data to be downloaded.

According to Telstra, it needed to maintain its copper network despite a large number of customers moving onto the national broadband network. It expected to fill up the discrepancy by the one-off increase in the prices.

“The ACCC has dealt with a number of complex issues during this inquiry, including the unique circumstances of the transition from Telstra’s copper network to the NBN. Our final decision on prices is the result of a number of considerations, with downward pressures more than offsetting upward pressures,” ACCC Chairman Rod Sims said in a statement.

“Downward pressures largely come from lower expenditures, falling cost of capital, the treatment of the effects of migration to the NBN and updated information on the NBN rollout. These more than offset upward pressures from a shrinking fixed line market due to consumers moving away from fixed line services and to mobile services.”

According to investment banking company Goldman Sachs, the decision by the ACCC could cost Telstra around AU$150 million in net present value. Telstra generates a revenue of around AU$1 billion every year by leasing out its copper network and thus the latest decision by the ACCC is not a favourable news for the company.

Telstra had enjoyed a huge support by then-Communications Minister Malcolm Turnbull as well as Finance Minister Mathias Cormann. Both had written to the ACCC, requesting it accept the proposal by the telecommunication giant so as to save the AU$11 billion deal entered between Telstra and the National Broadband Network to use the former’s copper network. However, their views have been overruled by the ACCC.

Sims said that he appreciates Turnbull and Cormann’s intervention but reiterated that ACCC is an independent body and it does what it understands to be the right thing to do after taking into consideration all the views that comes it’s way.

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