ACCC issues final pricing principles for transmission capacity services

The Australian Competition and Consumer Commission today issued its final report on the pricing principles to be used in assessing arbitrations and undertakings for the transmission capacity service.

Transmission capacity is a generic service that can be used for the carriage of voice, data or other communications using wideband or broadband carriage (the minimum bandwidth in the current declaration is 2 megabits per second). Carriers and carriage service providers can use transmission capacity to set up their own networks for aggregated voice or data channels, or for integrated data traffic (such as voice, data and video).

In finalising its pricing principles, an ACCC Commissioner, Mr Ed Willett, said: "The ACCC had considered industry views and decided not to vary its draft pricing principles, issued on 30 June 2004.

"The ACCC considers that transmission capacity services should be based on the Total Services Long Run Incremental Cost (TSLRIC) of providing these services as these are the prices that would be charged if the access provider faced effective competition".

Such an approach is consistent with the pricing principles developed for a number of other declared services (such as Domestic PSTN originating and terminating services and Unconditioned Local Loop Services). It is also consistent with the ACCC's Access Pricing Principles that were issued in 1997. However, in the absence of information to readily apply this approach, it will consider the use of benchmarking methodologies.

"The issuing of pricing principles is designed to increase certainty about the ACCC's approach to determining appropriate prices for regulated access to the transmission capacity service", Mr Willett said. "It should also assist industry in reaching commercial agreements on the price of the transmission capacity service, which is something the ACCC encourages".