Friday, 23 October 2020 13:44

Prices for regulated transmission services set to fall, says ACCC Featured

ACCC Chair Rod Sims ACCC Chair Rod Sims

The competition regulator the ACCC has flagged a substantial fall in the price of wholesale transmission services in many regional and rural parts of Australia following its 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, and the Australian Competition and Consumer Commission regulates transmission services in areas where there is little competition between transmission providers or limited infrastructure.

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 - and the DTCS is the regulated transmission service.

“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% lower than the previous FAD, and low capacity services have fallen by 35%.

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

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