The Australian Competition and Consumer Commission today announced its draft decision to remove the current access regulation on the intercapital transmission capacity service. This service is used for the transmission of voice, data and other communications between mainland capital cities.
The ACCC's decision to remove the regulation is based on evidence that the structure and conduct of the currently declared intercapital routes has changed. New entry has occurred on the eastern seaboard, by carriers such as PowerTel and Macrocom. Other carriers are in the process of building new networks, such as Amcom Communications.
"The ACCC's draft finding is that more competitive outcomes are already occurring on all intercapital routes, resulting in lower prices for purchasers of transmission capacity", ACCC Chairman, Professor Allan Fels, said.
The ACCC recognises that there are still only Telstra and Cable & Wireless Optus providing intercapital transmission between Melbourne and Perth. The ACCC received submissions expressing concern about wholesale prices between these cities.
However, the ACCC expects new and potential entrants to change the competitive dynamics of intercapital transmission markets. This emerging competition should lead to further reductions in transmission prices.
"The ACCC recognises that there is a risk in winding back regulation before new entry occurs", Professor Fels said. "The ACCC considered whether removing the regulation at this time might provide opportunities for the current suppliers to increase prices, prior to the entry of new carriers".
However, new entry by two carriers is already well progressed between Melbourne and Adelaide. Further, many purchasers of capacity should have already locked-in current prices.
"The ACCC was also mindful that the likely future benefits of the current regulation of intercapital routes were not clear, even in the time before new entry occurs. This is particularly important, given the burden lies with those proposing regulation or continuation of regulation to demonstrate the benefits it will bring", Professor Fels said.
The ACCC will continue to monitor the intercapital transmission service, to observe how the market develops after removing the regulation.
This decision does not change the existing regulation on routes other than those between the five mainland State capitals and Canberra.
The ACCC has released a Draft Report detailing its decision and seeks comments from interested parties by Thursday 12 April 2001. The ACCC will then finalise the report after having regard to any submissions made to the draft report.