The Australian Competition and Consumer Commission today issued its draft decision to 'declare' inter-capital and high bandwidth transmission services and some technical amendments to the current transmission services declaration.
Declaration should promote competition in the voice and data-related services markets, including national and international telephone services, Internet and other high-bandwidth data services. The decision to declare would mean existing suppliers of transmission services, including Telstra and Optus, must supply the services to access seekers on terms that ultimately can be arbitrated by the ACCC, if the parties cannot otherwise agree.
"Declaration gives service providers greater flexibility and stronger bargaining power to get access to transmission services which can be used to provide a range of voice and data-related products," Mr Rod Shogren, Commissioner with responsibility for telecommunications, said today. "This should increase competition, mean a better range of products and lower prices for end users.
"In forming its draft view that declaration is in the long term interests of end users, the ACCC is concerned to ensure that regulatory tools are used appropriately and in a measured way in order not to discourage new investment in transmission infrastructure, whether from current providers or new entrants. The ACCC understands there could be a number of new entrants which, in time, may pressure Telstra and Optus to compete more intensely.
"However, the ACCC is also particularly concerned to see more competitive pricing introduced for transmission services quickly, especially for long-haul and higher capacity services above 2 Mbps. Continued high prices for these services seem to be holding back competition in both voice and non voice services. "On the information provided so far, and having already warned the industry last June that the ACCC will maintain a watching brief in this area, it takes the view that more immediate pricing pressure must be put on Telstra and Optus and declaration is the quickest and most direct way of achieving this."
To allay concerns that declaration will force prices to unsustainable levels and discourage new entry and new investment, the ACCC will provide further guidance on possible pricing approaches before its final decision. This would include its approach to a number of issues involved in the estimation of the costs for inter-capital transmission, such as the treatment of excess capacity and rates of return commensurate with risk, and is seeking the views of interested parties on these aspects.
The ACCC has issued a draft report to let interested parties comment on the declaration and amendments. Comments are sought by 22 May 1998. The ACCC draft report on transmission services is available on the ACCC's website, http://www.accc.gov.au.