ACCC grants Telstra domestic transmission capacity service exemptions and commences DTCS declaration review
The Australian Competition and Consumer Commission today issued a final decision granting Telstra exemptions from its obligations to supply the declared domestic transmission capacity service (DTCS) for:
capital-regional transmission on nine capital-regional routes
inter-exchange transmission in 16 CBD exchange service areas, and
inter-exchange transmission in 72 metropolitan exchange service areas.
A class exemption will also be granted to the same extent.
The final decision rejects Telstra's exemption applications for the supply of DTCS for tail-end transmission in metropolitan and CBD areas.
The final decision substantively affirms the ACCC's draft decision on Telstra's DTCS exemption applications, which was issued on 22 September 2008.
"The ACCC has granted exemptions for the declared transmission service where there is evidence of facilities-based competition," ACCC Chairman, Mr Graeme Samuel, said today.
The proposed exemptions are not as broad as those requested by Telstra. Further, the decision only relates to wholesale voice services, not broadband services which are not subject to open access regulation.
The ACCC has only granted exemptions in areas where there is evidence of two alternative fibre networks, in addition to Telstra, which the ACCC considers to be competitive or posing a threat of competition.
Transmission networks are generally considered enduring bottlenecks because of the high sunk costs associated with construction. However, the ACCC considers the existence of infrastructure based competition in a particular transmission market indicates that it may no longer be a bottleneck. The ACCC considers the removal of regulation in such a case to be in the long-term interests of end-users due to the enhanced possibilities for more robust facilities based competition.
The ACCC also announced today that it will hold a public inquiry to review the DTCS declaration in accordance with its obligations under the Trade Practices Act 1974.
The purpose of the public inquiry is to determine whether the declaration of the DTCS should be remade, extended, revoked, varied or allowed to expire. The current DTCS declaration is due to expire on 31 March 2009 and under the Act, the ACCC is required to complete its review prior to this date.
A discussion paper will be issued today which identifies issues relevant to the review and seeks comments on particular aspects of the DTCS and related markets and the impact of regulation on these markets.
To assist its decision, the ACCC is seeking submissions on its discussion paper from stakeholders and interested parties by 23 December 2008. The ACCC expects to issue a draft report setting out its preliminary findings in early 2009.
The ACCC's final decision on Telstra's exemption applications and the DTCS declaration review discussion paper will be available on the ACCC website.
For media inquiries to the ACCC Chairman, Mr Graeme Samuel, or Mr Michael Cosgrave, Executive General Manager, Communications Group, please call Ms Lin Enright, ACCC Media, on (02) 6243 1108 or 0414 613 520. For general inquiries, please call the Infocentre: 1300 302 502.
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The domestic transmission capacity service is a generic service that can be used for the carriage of voice, data or other communications using wideband or broadband carriage. The service was declared in June 1997 and varied in November 1998, May 2001 and April 2004.
On 24 August 2007, Telstra lodged applications with the ACCC under section 152AT of the Trade Practices Act 1974 seeking individual exemptions from the Standard Access Obligations (SAOs) for DTCS on 20 capital-regional routes.
On 21 December 2007, Telstra lodged four exemption applications respectively for:
inter-exchange transmission in 17 capital city band 1 ESAs for all declared bandwidths
tail-end transmission in 17 capital city band 1 ESAs for all declared bandwidths
inter-exchange transmission in 115 metropolitan band 2 ESAs or regional ESAs for all bandwidths and
tail-end transmission in 128 metropolitan band 2 ESAs for bandwidths up to 2 Mbps.
On 22 September 2008 the ACCC issued a draft decision on Telstra's exemption applications. Interested parties had until 13 October 2008 to make submissions.
The ACCC has the power in section 152AT of the Act, upon application by a carrier or carriage services provider, to make an order exempting the carrier or carriage service provider from the SAOs for a declared service. The ACCC also has power under section 152AS of the Act to determine that the members of a specified class of carrier or class of carriage service provider are exempt from the SAOs for a declared service. The ACCC must not make such an exemption order or determination unless it is satisfied that granting the exemption will promote the long-term interests of end users (LTIE) as defined in section 152AB of the Act. An exemption order may be unconditional or subject to such conditions or limitations as are specified in the order.
In its 2004 transmission capacity inquiry, the ACCC proposed that routes which have at least three optical fibre suppliers either serving these regional centres or in very close proximity (within one kilometre or less from the GPO of a regional centre for a given capital-regional route) be exempted from declaration.
The existing declaration for the DTCS is due to expire on 31 March 2009. The ACCC is required to conduct the DTCS declaration review pursuant to section 152ALA of the Act. Under section 152ALA, a declaration made by the ACCC is required to specify an expiry date within five years of the date of commencement and a complete review of the declaration must be held prior to its expiry date. The review is to be conducted pursuant to Part 25 of the Telecommunications Act 1997.
