ACCC proposes benchmark backhaul prices

The Australian Competition and Consumer Commission (ACCC) has proposed a new approach to domestic transmission capacity service pricing using domestic benchmarking based on access prices in competitive backhaul areas.

A pricing discussion paper was released by the ACCC in April and received submissions from providers including Telstra, Optus, iiNet and Vodafone Hutchison Australia.

All telcos identified that the existing approach to domestic transmission capacity service pricing — based on "total service long- run incremental cost of providing the service, including a mark up for common costs" — was flawed, according to the report (PDF). However, they disagreed on the best approach fix the problem.

The approach the ACCC proposes will result in a range of prices for backhaul routes, based in part on the prices for services on competitive transmission routes in metropolitan areas of Australia. These areas are exempt from ACCC regulation and generally have three or more transmission providers offering services.

In determining prices, the ACCC will also take into account international benchmarking reports on backhaul transmission pricing, however Telstra raised concerns with this approach. The telco said that due to Australia's low population density, the use of backhaul infrastructure on regional routes was much lower in Australia compared to other parts of the world. For that reason, the ACCC said it would also take into account the distance of the routes in determining the cost.

In a statement released yesterday, the ACCC said that the price component of capacity on backhaul networks had been highlighted as a significant telco industry issue in submissions it received into the National Broadband Network points of interconnect discussion paper earlier this month.