Prices for regulated transmission services set to fall

The price of wholesale transmission services in many regional and rural parts of Australia will fall substantially following the ACCC’s decision to reduce the regulated prices for the declared Domestic Transmission Capacity Service (DTCS).

The wholesale transmission service underpins many communications services that consumers rely on, including mobile and broadband services. The ACCC regulates transmission services in areas where there is little competition between transmission providers or limited infrastructure.

“We expect these lower prices will promote competition in downstream retail markets which will lead to lower prices as well as new, innovative services for consumers,” ACCC Chair Rod Sims said.

The ACCC’s 2020 DTCS final access determination (FAD) sets pricing which is significantly lower than the previous regulated prices. For example, regulated prices for high capacity services will be 60 per cent lower than the previous FAD. Low capacity services have fallen by 35 per cent.

“The downward trend in commercial transmission prices has continued over the past five years, which is reflected in the lower regulated DTCS pricing,” Mr Sims said.

The prices set out in the FAD are based on a benchmarking model developed by the ACCC in 2016, which uses transmission prices on competitive routes to determine appropriate prices on regulated routes. The 2020 FAD reflects the overall decline in prices since 2016.

The new FAD also takes into account the higher costs and risk for providing undersea cable services to Tasmania and Christmas Island.

“It is important that regulated prices reflect, and allow for, the recovery of these costs, but still promote competition,” Mr Sims said.

The ACCC has provided a calculator on its website to assist access seekers and providers calculate regulated prices for declared DTCS routes. The prices for the DTCS will apply until 31 March 2025.

The ACCC’s final decision and related materials are available at Domestic transmission capacity service final access determination inquiry 2019-2020.

Background

Transmission, often referred to as backhaul, is a high capacity wholesale service used by telecommunications companies to carry large volumes of data between locations where they do not have their own infrastructure. The DTCS is the regulated transmission service.

While there is a lot of competition on transmission routes between capital cities and in metropolitan areas, the ACCC regulates transmission on routes in regional and outer metropolitan areas where there is insufficient competition.

The last pricing decision was in 2016. Since then, commercial prices have fallen considerably which is reflected in the revised pricing.

The FAD prices are a fall-back option if access seekers and access providers are unable to reach commercial agreement. In that sense they act as a reference price for commercial negotiations. The FAD also includes standard non-price terms and conditions of access.

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