Friday, 04 September 2015 12:05

Transmission prices heading down with ACCC draft decision

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Transmission prices heading down with ACCC draft decision Image courtesy of Stuart Miles, freedigitalphotos.net/images

Price cuts aimed at maintaining a competitive transmission services market in the telecommunications sector will likely flow from the ACCC’s draft final access determination for transmission capacity issued today.

Transmission – or backhaul - is a high capacity wholesale service used by telecommunications companies to carry large volumes of data between locations where they do not have their own infrastructure and, while there is a lot of competition on transmission routes between capital cities and in metropolitan areas, the ACCC regulates transmission on routes in regional areas and outer metropolitan areas where there is insufficient competition.

ACCC chairman Rod Sims said the draft decision provides for the declared domestic transmission (backhaul) capacity service (DTCS) pricing, which is “significantly lower” than the regulated prices set in the commission’s 2012 access determination.

Sims says, on average, draft DTCS prices are 22.2% lower than prices set in 2012.

“The regulation of the transmission network plays an important role in promoting competition in the telecommunications markets, particularly in regional areas,” Sims said.

“The ACCC’s draft decision will see prices for regulated routes, on average, follow the downward trend we have seen on more competitive routes.”

Sims says the decline in the regulated price, however, varies depending on the geographic route type, capacity and distance of a particular service - for instance, average regulated pricing for the DTCS is 17.6% lower in metropolitan areas and 23.8% lower on regional routes.

Sims also says that regulated prices for higher capacity services are also substantially lower than in 2012, with a slight increase in lower capacity services under 5km in metropolitan areas, “however overall prices would be lower under this FAD.”

In its recent declaration decision, the ACCC determined which parts of the transmission networks are uncompetitive and require regulation and removed regulation from those transmission routes and areas that were found to be competitive.

“The ACCC’s draft decision sets out a domestic benchmarking methodology for determining annual prices for regulated transmission services,” Sims said.

“Under this approach, transmission prices on competitive routes are used to determine prices that would be expected for declared routes if these routes were priced competitively by the market.”

The ACCC has provided a calculator on its website to assist access seekers and providers to determine regulated prices for declared DTCS routes.

The ACCC has invited submissions on the draft decision until 2 October and expects to release a final decision in November 2015.

Chart 1 – Comparison of 2012 FAD and draft 2015 FAD regulated price – Metropolitan 2Mbps:

http://www.accc.gov.au/sites/www.accc.gov.au/files/DCTS%201_1.jpg

 

Chart 2 – Comparison of 2012 FAD and draft 2015 FAD regulated price – Regional 100Mbps

http://www.accc.gov.au/sites/www.accc.gov.au/files/DCTS2_1.jpg

 

Chart 2 – Comparison of 2012 FAD and draft 2015 FAD regulated price – Regional 100Mbps:

 

 

 

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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