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ACCC Decides On DTCS Backhaul Pricing

The Australian Competition and Consumer Commission (ACCC) has released its final decision on prices for regulated transmission services, setting Domestic Transmission Capacity Service (DTCS) pricing “significantly lower” than its last pricing decision in 2012.

The ACCC noted the decline in average prices upon releasing its 2016 DTCS final access determination (FAD) pricing.

Compared to the 2012 FAD, it is estimated that average prices for short-distance, low-capacity services (2 Mbps) decline by 13 per cent in metro areas and 22 per cent in regional areas, while the average prices for long-distance, high-capacity services (100 Mbps) decline by 76 per cent in metro areas and 78 per cent in regional areas, the ACCC advised.

“We have seen a downward trend in commercial transmission prices in recent years and this trend is reflected in lower DTCS pricing, particularly on high-capacity, regional routes,” ACCC chairman Rod Sims commented.

“Because transmission is an essential input for many services, we consider that lower prices will promote competition in downstream markets and put more downward pressure upon wholesale transmission prices, particularly in regional areas.

“We expect that these lower prices will be passed on to end-users in the form of lower prices and new, innovative services.”

The ACCC advised that regulated transmission services prices are based upon a domestic benchmark of prices in competitive areas.

“Under this approach, transmission prices on competitive routes are used to determine prices that would be expected for declared (or regulated) routes if these routes were priced competitively by the market,” it states.

The FAD additionally sets an uplift factor for services to Tasmania, seeking “to account for the increased costs and risk in providing services which use an undersea cable component, such as those across Bass Strait”.

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

“While the higher uplift factor provides pricing similar to current commercial pricing at the lower-capacity levels, there are significant reductions in regulated prices for higher-capacity services.”

The DTCS prices will apply from April 21, 2016 to December 31, 2019.

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