ACCC sets interim backhaul prices

The Australian Competition and Consumer Commission has issued interim price and non-price terms for Australia’s domestic transmission capacity service (DTCS).

The regulator today released an interim access determination for Ethernet and fibre backhaul links, backdated to span the entire 2011 calendar year.

Although the DTCS has been a declared service since 1997, the ACCC has previously issued no indicative prices nor made decisions in dispute arbitration.

The difficulty the ACCC has faced was that the DTCS was not particularly amenable to the ACCC's previous practice of cost based pricing.

For example, Communications Minister Stephen Conroy in announcing the regional backhaul blackspots program highlighted the fact that backhaul from Geraldton to Perth is dearer in the commercial market than backhaul from Perth to Sydney.

But to work out a price the total cost has to be divided by the number of units sold – of which there are a lot more in Perth to Sydney than in Perth to Geraldton.

Interim schedule

In its DTCS IAD, the Commissioner used a benchmarking approach, where typical routes were benchmarked against the prices that apply in actually competitive markets, since competition could indicate overall traffic volume.

Price was based on capacity and distance (pdf), with schedules set for inter-capital, inter-exchange, regional, and tail-end DTCS.

"While parties can negotiate their own terms and conditions, the interim access determination provides a clear safety net when negotiating commercial terms and conditions for important backhaul links," the Commission announced.

It also noted that prices would change “as the market develops”, and expected further input from stakeholders prior to issuing a final access determination.

The release of the DTCS IAD followed the commission’s release of IADs for six fixed-line services last month, under which a flat $16 a month charge was set for most wholesale access to Telstra’s copper network.

The commission said Telstra provided more than 80 percent of DTCS across the country, measured by either revenue or number of services.