The Australian Competition and Consumer Commission has issued a final access determination for the declared domestic transmission capacity service (DTCS).
Transmission, often referred to as backhaul, is a high capacity wholesale service that aggregates traffic (including data and voice) on other services and carries it between service providers’ points of inter-connection in different locations. For example, inter-capital transmission may carry the combined traffic of an ISP’s customers between capital cities.
“Transmission is a key wholesale input to other communications services. The final access determination includes prices for regulated transmission services and sends an important signal to the industry about the prices that would be expected in a competitive market,” ACCC Commissioner Ed Willett said.
While parties are still able to negotiate their own commercial agreements, the final access determination establishes benchmark prices for regulated transmission services and non-price terms and conditions for access seekers to fall back on in negotiations. It will expire on 31 December 2014.
The final access determination prices are based upon a domestic benchmark of transmission prices in competitive areas. Benchmark prices are used to determine DTCS prices that would be expected in uncompetitive areas if they were competitive. The domestic benchmark model takes account of the key drivers of transmission prices including the type of transmission route, distance, data rate, level of protection and quality of service.
Prices are then generated by a formula according to the key drivers noted above. The ACCC has provided a calculator on its website to assist access seekers determine regulated prices for declared DTCS routes.
The benchmark prices are derived from industry data collected in 2011. The ACCC found prices for DTCS services vary significantly, with some market prices lower than the benchmark prices and some higher.
The ACCC notes that a broad range of discounts are available to purchasers of transmission services. The DTCS final access determination sets prices based upon a one year contract term which does not account for discounts that purchasers may negotiate for longer-term contracts or for volume based purchases.
“Overall, the ACCC expects the DTCS final access determination will put downward pressure on wholesale transmission prices, particularly in regional areas, which can be passed on to consumers in the form of lower prices and new, innovative services,” Mr Willett said.
“This is the first time that prices have been set for the DTCS using this type of domestic benchmark and the ACCC will monitor transmission prices closely during the term of the final access determination.”