ACCC extends DTCS regulation for five more years

2 Apr 2019

The Australian Competition and Consumer Commission (ACCC) has concluded its inquiry into the regulation of transmission services and released its final report for the Domestic Transmission Capacity Service (DTCS) segment, often referred to as backhaul. In so doing, the regulator confirmed it has decided to extend the DTCS declaration for a further five years, while also revealing that it will vary the service description, consistent with a draft report it released in December 2018.

In a press release regarding the matter, the ACCC argued that, while in many areas there are now four or more transmission providers, competition in the market for transmission services remained ‘less developed in outer metropolitan and regional areas’. As such, it said that in deciding which routes to regulate, it had sought to focus on the long-term interests of end users, including whether declaration would promote competition.

In line with the above, the ACCC report found that changes to the industry since its last inquiry in 2014 warranted a variation to the service description to reflect the way that transmission services are currently being acquired. These include: the introduction of a separate service classification for mobile backhaul ‘to reflect the unique supply and demand characteristics of mobile backhaul, particularly in regional and remote areas’; new distinct service categories for commonly acquired bandwidths; and the addition of online ordering and fault monitoring as basic service features.

Furthermore, the ACCC noted that it had reviewed the competition criteria ‘to better reflect and account for changes in industry structure since the last declaration inquiry’. Having assessed all routes and Exchange Service Areas (ESAs), the regulator said it had found an additional 137 metropolitan and 27 regional ESAs to be sufficiently competitive, confirming that these will be deregulated.

With the DTCS declaration to be extended from 1 April 2019 to 31 March 2024, changes to the DTCS service description will come into effect on 1 January 2020, with this delay designed to provide stakeholders with time to make any necessary adjustments to their commercial arrangements. Looking ahead, meanwhile, the ACCC said it plans to review the pricing of the DTCS in the next Final Access Determination (FAD), with a discussion paper to be released in May 2019.