ACCC Overhauls Telecommunications Pricing in Australia

Australia ( April 19, 2011

ACCC Overhauls Telecommunications Pricing in Australia

ACCC Overhauls Telecommunications Pricing in Australia

The Australian Competition and Consumer Commission today issued an interim access determination (IAD) for regulated transmission services under the new telecommunications access regime which took effect on 1 January 2011.

The IAD provides interim price and non-price terms for the declared domestic transmission capacity service. Interim prices for regulated transmission services have been determined by benchmarking current prices of competitive transmission services based on information provided by the suppliers of transmission services.

Transmission services are a fundamental input to fixed and mobile services and provide connectivity for service providers and end-users across the country. Telstra provides more than 80 per cent of transmission services measured either by revenue or number of services. While the Domestic Transmission Capacity Service (DTCS) is often referred to as ‘backhaul’, the DTCS is limited by the scope (both in terms of technology and geography) of the service description and only represents one of a number of backhaul options commonly used in communications networks.

Benchmarking current prices reflects existing market conditions and different price structures across regions. This produces a range of IAD prices across both capacity and distance. Some pricing outcomes from the benchmarking (where prices decrease over longer distances or at higher capacities) may appear counter intuitive to the general, well recognised observation that transmission prices increase with both capacity and distance. However, these reflect the way that inter-regional centre transmission is routed which may be direct or via state capital cities.

The ACCC expects that prices will change as the market develops and expects further input from stakeholders during the public inquiry associated with the final access determination. However, the ACCC considers that in the interim, the IAD will provide the required level of regulatory certainty until a final access determination is made.

“Today represents an important milestone in implementing the new telecommunications access regime,” ACCC acting chairman Michael Schaper said.

“The ACCC has now set interim price and non-price terms for regulated transmission services, the backbone links of modern communications networks. While parties can negotiate their own terms and conditions, the interim access determination provides a clear safety net when negotiating commercial terms and conditions for important backhaul links.”

As permitted by the relevant legislation the IADs have been backdated to commence on 1 January 2011 and expire on 31 December 2011, or when a final access determination for the declared domestic transmission capacity service is introduced, whichever is earlier. The ACCC may vary  the IAD before making a final access determination.

The ACCC has also released a statement of reasons with the new IAD.

The ACCC will commence the public inquiry into making a final access determination for regulated transmission services in the near future.

The DTCS IAD and Statement of Reasons can be found on the ACCC’s website at:

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