A final decision on the prices for the declared Domestic Transmission Capacity Service (DTCS) has been published by the Australian Competition and Consumer Commission (ACCC). In its final access determination (FAD) the regulator has set DTCS pricing significantly lower than in its previous ruling from 2012: average prices for short distance, low capacity services (2Mbps) will be cut by 13% in metro areas and 22% in regional areas; and average prices for long distance, high capacity services (100Mbps) are to be reduced by 76% in metro areas and 78% in regional areas. However, the ACCC has noted that the extent of the reduction in pricing for a specific part of the market will ‘depend upon the geographic route type, capacity, and distance of a particular service’.
The transmission prices are based upon a domestic benchmark of prices in competitive areas. Following the publication of the draft decision in September 2015, further consultation and analysis of the data prompted the ACCC to make some adjustments to the model, particularly for the pricing of low capacity, short distance services which are used to provide voice services in the corporate and government sectors. The FAD also sets an uplift factor for services to Tasmania, which seeks to account for the increased costs and risk in providing services which use an undersea cable component.
Commenting on the final ruling, ACCC chairman Rod Sims was cited as saying: ‘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 … 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 prices for the DTCS will apply from 21 April 2016 to 31 December 2019.