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Competition watchdog slashes wholesale regional backhaul prices

Competition watchdog slashes wholesale regional backhaul prices

The reductions range from 35 per cent up to 60 per cent.

Credit: ACCC

The price of regional and rural wholesale transmission services is set to fall following action by the Australian Competition and Consumer Commission (ACCC).

Set to expire on 31 March 2025, the new pricing sees regulated prices for high capacity services cut by 60 per cent compared to the previous price reduction seen in 2016, with low capacity services prices reduced by 35 per cent.

The changes come as part of the Australian consumer watchdog’s 2020 final access determination (FAD) for the Domestic Transmission Capacity Service (DTCS).

Transmission, otherwise known as backhaul, is a high capacity wholesale service used by telecommunications companies to carry large volumes of data between locations where they don't own infrastructure, with the DTCS being the regulated transmission service. 

The ACCC regulates transmission on routes in regional and outer metropolitan areas where is "insufficient" competition, according to the consumer watchdog. This is opposed to capital cities and metropolitan areas, which the ACCC said has "a lot of" competition.

“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 prices are based on the ACCC’s benchmarking model from 2016, which use transmission prices on competitive routes to determine appropriate prices on regulated routes up to 1 Gbps.

“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.

In addition to that downward trend, the new FAD also accounts for the higher costs and risks for the provision of 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 added.

The decision to reduce the price of wholesale transmission prices by the ACCC follows a similar move to reduce the price of wholesale mobile services in early October, from 1.7 cents per minute to 1.19 cents per minute.

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