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NECG Papers

Comments on the pre-publication draft of the international benchmarking report

These papers were released on 17 March 1999 with the report International Benchmarking of Australian Telecommunications Services.

The papers, prepared in response to a Commission request for comment on a pre-release draft of the international benchmarking report, are:

  • Financial performance and comparability which examines some of the factors that drive differences in telecommunications services in different countries, and comments on the problems of using prices as an indicator of productive efficiency;
  • Nominal exchange rates and PPP’s which discusses the use of different exchange rate measures in comparing telecommunications services prices;
  • The USO and the impact of geography on costs which addresses the impact of demography on telecommunications costs;
  • Rebalancing which discusses how price re-balancing such that prices reflect costs impact on relative prices in the different telecommunications markets; and
  • Commentary on the Finnish telecommunications market and Commentary on the Swedish telecommunications market which describe some of the features of the two lowest priced countries in the Commission’s analysis

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Contents

FINANCIAL PERFORMANCE AND COMPARABILITY

1 Financial performance

2 Other factors that influence performance
Productive efficiency
External factors
Diffeneces in accounting conventions
Differences in the age of assets
Summary

NOMINAL EXCHANGE RATES AND PPP’S

THE USO AND THE IMPACT OF GEOGRAPHY ON COSTS

1 Introduction

2 Structure of this note

3 Factors influencing the USO in Australia
The current USO payment
The balance of the evidence
Evidence that geography has significant impact on costs
Customer line density in the sample

4 USO requirements in the international sample
4.1 The UK
4.2 Finland
4.3 Sweden
Pressure to formalise the USO

REBALANCING

Summary
Sweden and Finland
Other issues in re-balancing

COMMENTARY ON THE FINNISH TELECOMMUNICATIONS MARKET

1 Introduction
Summary of conclusions

2 The extent of re-balancing
Summary
Re-balancing
De-averaging
Price of leased lines

3 Factors contributing to price flexibility
Summary
3.1 Light-handed regulation
Licensing
Pricing
Disclosure
3.2 The legacy of separation
3.3 High penetration of mobiles
3.4 Social security

4 Factors that have not been important in respect of price
Summary
Unbundling the can
Number portability

5 Trends in industry structure

6 The nature of ownership contributes to low prices

COMMENTARY ON THE SWEDISH TELECOMMUNICATIONS MARKET

1 Introduction
Summary of conclusions

2 The extent of re-balancing
Summary
Re-balancing
Geographical de-averaging

3 Factors contributing to price flexibility
Summary
3.1 Light-handed regulation
The Competition authority (KKV)
Licensing
Disclosure
3.2 Mobiles
3.3 Social security

4 Factors that have not been important in respect of price
Summary