ACCC reduces regulation of telecommunications transmission services

The Australian Competition and Consumer Commission today issued a new declaration for the transmission capacity service. 

This replaces the former declaration which expired on 31 March 2004 and which the ACCC was required to review prior to this date.

The major change from the previous declaration is that the new declaration excludes 14 capital-regional transmission routes listed below. These are routes which currently have at least three carriers supplying, or readily capable of supplying, transmission capacity services along via optical fibre links.

Capital-regional routes removed from declaration

Inter-capital* transmission remains outside the declaration.  The ACCC has also decided to discontinue entirely the inter-capital transmission monitoring program that has operated since 1999, on the basis that there is now sustained competition on all these inter-capital routes. 

The ACCC observes that to date many long-distance transmission markets have been more conducive to entry of a number of major alternative infrastructure suppliers than markets for local or 'last-mile' access.

"Where effective competition in particular transmission markets is evident, the ACCC considers that ongoing declaration and price monitoring would impose unnecessary regulatory costs", ACCC Commissioner, Mr Ed Willett, said today. 

All other transmission, including CBD inter-exchange and CBD tail-end transmission services, will continue to be declared. The ACCC considers that these services are not subject to sufficient competition and the ability of access seekers to purchase these services from other carriers, notably Telstra, provides an important means of entry into downstream markets. In many cases this can serve as an important stepping stone to greater facilities based competition in the longer-term.

The transmission capacity service is a wholesale high bandwidth service (greater than 2Mbps) used for the transmission of voice, data or other communications between points located throughout Australia. It is used as an input in the supply of a wide range of retail voice call and data services.

The new transmission capacity service declaration commences on 1 April 2004 and will apply for five years.

"The ACCC will commence development of pricing principles for the transmission services still covered by the declaration.  These should serve to aid commercial negotiations to enable access to these services at reasonable prices", Mr Willett said.

The reasons for the ACCC's decision on this matter are contained in the final decision report Transmission capacity service – Review of the declaration for the domestic transmission capacity service.

*For the purpose of the transmission service description inter-capital routes are those between Adelaide, Brisbane, Canberra, Melbourne, Perth or Sydney.

Background

The transmission capacity service was deemed to be declared in 1997.  Variations to this declaration were made in 1998 and 2001 which included and then excluded respectively, the major inter-capital routes other than those between Sydney, Melbourne and Canberra. 

Part XIC of the Trade Practices Act 1974 establishes a regime for regulated access to carriage services and services which facilitate the supply of carriage services. Access obligations in relation to a particular service are established following the declaration of that service by the ACCC. 

The ACCC's power to declare a service is contained in section 152AL of the Act.  Under section 152AL, the ACCC can declare an eligible service once it has conducted a public inquiry according to Part 25 of the Telecommunications Act 1997 to determine whether declaration is in the long terms interest of end-users (LTIE). Once a service is declared, the access provider must, upon request, make access available to service providers, taking all reasonable steps to ensure that technical and operational quality is equivalent to that which the access provider provides itself. 

In addition to the ACCC's power to declare a service, it also has the power to vary or revoke an existing declaration. Subsection 152AO(1) of the Act stipulates that subsection 33(3) of the Acts Interpretation Act 1901 applies to the ACCC's declaration powers under section 152AL of the Act.  Subsection 33(3) provides that the power to make, grant or issue an instrument shall be construed to include a power to repeal, rescind, revoke, amend or vary such an instrument.

In December 2002, transitional provisions associated with the new Section 152ALA of the Act came into force. Under these new provisions, the ACCC was required to specify an expiry date for existing declarations within five years of their commencement. In May 2003 the ACCC outlined a timetable for the expiry of all existing declarations, and decided on an expiry date of March 2004 for the declaration relating to the transmission capacity service.

In September 2003, as a first step in the review process, the ACCC issued a  discussion paper which sought comment on issues related to the scope of the declaration of the transmission capacity services. The ACCC received five submissions in response which it considered in arriving at its draft decision.
 
In December 2003, the ACCC issued its draft decision report which outlined that it intended to remove 24 nominated capital-regional routes from declaration and would give consideration to removing 'inter-exchange local' transmission in the CBDs of Sydney, Melbourne, Brisbane, Adelaide and Perth from declaration. In addition, the ACCC proposed that the inter-capital monitoring program be curtailed to focus on the Melbourne-Adelaide and Adelaide-Perth routes for 12 months.

The ACCC received four submissions in response to its draft decision report and conducted a number of further market inquiries.  This information has assisted its final decision.