iiNet is set for a much bigger windfall from Telstra after the Australian Competition and Consumer Commission today advised the Perth-based ISP that the final price it was likely to force Telstra to on-sell its wholesale broadband service would be lower than originally estimated.
The ACCC has set a $2.50 per service per month charge in a draft final determination - 70 cents less than the $3.20 it flagged it was likely to impose on Telstra in December.
Telstra is currently charging iiNet $9 per service per month.
iiNet said today that the $2.50 charge was applicable from November 28 2005 and that Telstra would have to reimburse the company $8.8 million.
iiNet said the $2.50 figure is at this stage in draft determination and is subject to 28 days consultation between parties before the ACCC will make its final determination.
The company's full announcement is below:
iiNet today received the draft final determination from the Australian Competition and Consumer Commission for the arbitration of the access dispute between iiNet (Chime) and Telstra relating to the supply of the line sharing service.
The pricing contained in the draft final determination is $2.50 per LSS per month. This has the effect of reducing the Company's network costs by approximately $800k per month compared to the previous rate of $9.00 per month.
The rate of $2.50 is $0.70 per service per month lower than the $3.20 pricing indicated in the interim determination received in December 2006.
The new pricing will be applicable from 28 November 2005 being the date that iiNet lodged its access dispute with the ACCC. This will result in Telstra reimbursing $8.8 million to iiNet for the period from 28 November 2005 until 30 March 2007. The amount applicable to the first half of FY07 is $4.2 million with $4.4 million applicable to FY06.
In addition the final determination has confirmed the LSS connection charges which will result in iiNet recouping a further amount of approximately $1.8 million for this service. This item is a capital cost so it will have the benefit of reducing the Company's depreciation charge.
The draft is subject to 28 days consultation between the parties before the final determination is issued.
