ACCC issues final Telecommunications Transmission Cost Model to guide pricing of the service
The Australian Competition and Consumer Commission has issued the final version of the Telecommunications Transmission Cost Model. The model has been designed with the flexibility to calculate cost-based pricing for backhaul on any land based (terrestrial) or under sea (submarine) telecommunications transmission route in Australia.
"Transmission capacity services are a critical input to the supply of broadband services to end-users across Australia and with increased numbers of fixed and wireless networks, the pricing of these services will become increasingly important," ACCC Chairman, Mr Graeme Samuel, said today.
The price of backhaul on routes without effective competition has often been cited by access seekers as a key obstacle to the roll-out of high-speed broadband into regional and rural Australia.
The ACCC will use this model to assess the costs of supplying transmission services in different regions of Australia as it carries out its regulation of transmission services and arbitration of access disputes.
Transmission or backhaul costing is highly route dependent and thus does not easily lend itself to simple pricing structures or models. For example, the backhaul route to Tasmania has a unique and significant submarine component as it crosses Bass Strait. The model has been developed over a period of time to take this complexity into account to provide cost-based pricing for individual routes.
Users of the model will need to supply the equipment cost and dimensioning data for the particular transmission route they seek to assess. The model is supplied with full user documentation and can be freely downloaded from the ACCC website.
The ACCC is particularly interested in hearing from users of the model in relation to the appropriate cost and dimensioning parameters to set in the model for each route of interest to them. The ACCC intends to prepare indicative prices for the transmission service across a variety of routes and commence a short consultation process.
Media inquiries
Mr Graeme Samuel, Chairman, 0408 335 555
Mr Michael Cosgrave, Group General Manager, Communications Group, (03) 9290 1914or 0416 043 160
Ms Lin Enright, Director, Media Unit, (02) 6243 1108or 0414 613 520
Declaration Under Part XIC of the Trade Practices Act 1974, the ACCC may 'declare' services where it determines that this would be in the long-term interests of end-users. Once a service is declared, carriage services providers are required to comply with standard access obligations in the supply of this service. This includes that CSPs are required to allow service providers to provide carriage and/or content services to end-users.
The Domestic Transmission Capacity Service was originally deemed declared on 30 June 1997. Since that time, the ACCC has conducted public inquiries in 1998, 2001 and 2004 to review this declaration.
In April 2004, the ACCC re-declared the Domestic Transmission Service for a period of five years. The current scope of declaration includes 'inter-capital' transmission, 'inter-exchange transmission', 'other' transmission and 'tail-end transmission' (these are defined in the discussion paper issued today). However, the scope of the declaration was revised to exclude transmission capacity:
between the main capital cities (i.e. inter-capital transmission between Adelaide, Brisbane, Canberra, Melbourne, Perth and Sydney), and
on 14 nominated capital-regional routes.
The current declaration will expire on 31 March 2009. The ACCC must commence a declaration inquiry in the 12 month period prior to the expiry of the declaration.
Pricing The pricing principles for the transmission capacity service were released by the ACCC in September 2004. The Pricing Principles state that where it is practicable to do so, the price of the domestic transmission capacity service should be equal to the Total Service Long Run Incremental Cost (TSLRIC+) of the service.
Where it is not practicable to set prices on the basis of TSLRIC+, the price should be set having regard to an appropriate benchmark. For example, a service price may be an appropriate benchmark where it is supplied in a competitive market or its physical attributes are comparable to the Domestic Transmission Capacity Service on the route in question.
The Model The model has been configured to estimate the cost of supplying transmission services between various capital–regional locations in Australia and was developed by an independent expert consultant – Gibson Quai-AAS.
The model was first released for industry comment in May 2007.
A number of changes have been made to the model following public submissions and an independent review of the model by Frontier Economics.
User Feedback and Suggestions The ACCC welcomes interest in the transmission cost model and invites users of the model to submit proposed parameters for the model for the routes that are of interest to them. User suggestions, revisions and feedback on the model are also welcome.
Such feedback can be provided to:
Ms Nicole Hardy Director Communications Group GPO Box 520 Melbourne VIC 3001
