ACCC to continue regulating backhaul

With the NBN creating "some degree of uncertainty", the ACCC has decided to continue regulating backhaul, but has said there is enough competition at 137 metro and 27 regional exchanges.

While deciding to continue regulating the Domestic Transmission Capacity Service (DTCS) for another five years, more than 150 specific exchange serving areas (ESAs) have been deregulated by the Australian Competition and Consumer Commission (ACCC).

The decision came under the ACCC's draft report on DTCS [PDF] that was published this week, which sees 137 metropolitan and 27 regional exchanges deregulated due to sufficient backhaul competition with Telstra from other providers.

The ACCC explained that it is deregulating areas where there are at least three competing fibre providers present; providers within 150 metres of a Telstra exchange; the provider's fibre is connected to a capital city CBD; at least one non-Telstra provider that is supplying services at the ESA; and/or there is evidence for price-based competition.

"The ACCC considers that where there is evidence of competition, or the appropriate conditions for competition, removing regulation will not be detrimental to the objective of promoting competition," it said.

"In particular, the removal of regulation will be likely to promote facilities-based competition, as it would send market signals that regulation will be removed where such competition is occurring or likely to occur."

Some of the metro areas being deregulated include Terrey Hills, Lindfield, Five Dock, Mona Vale, Narellan, Rooty Hill, Sylvania, Vaucluse, Matraville, Menai, and Northbridge, in Sydney; Balaclava, Bayswater, Dandenong North, Dandenong South, Doncaster, Kew, Newport, Werribee, and West Essendon, in Melbourne; Brisbane Airport, Redcliffe, Ascot, Lytton, and Newmarket, in Brisbane; Freemantle, Joondalup, Scarborough, Wanneroo, Nedlands, and Bassendean, in Perth; Port Adelaide, North Adelaide, Coromandel Valley, Elizabeth, Glenelg, Paradise, Prospect, and Osborne, in Adelaide; and Barton, Belconnen, Deakin, Fyshwick, Manuka, Mawson, Melba, Queanbeyan, and Scullin, in Canberra.

The 27 regional areas being deregulated are Tweed Heads, Maitland, Berkeley Vale, Erina, Wyong, and Port Macquarie, in New South Wales; Horsham, Mount Clear, Belmont, Wangaratta, and Pakenham, in Victoria; Burleigh Heights, Currumbin, Bundamba, Caboolture, Ormeau, Springfield, Waterford, Wurtulla, Nambour, and Gulliver, in Queensland; Seaford and Gawler, South Australia; and Baldivis, Medina, Pinjarra, and Rockingham, in Western Australia.

Overall, however, the ACCC said that despite the rollout of the National Broadband Network (NBN), it will continue regulating transmission services as "the business services market on the NBN is only just developing".

"The ACCC considers that while the NBN will increasingly have an impact on the structure of the geographic market for the DTCS, this market is still evolving. Its view is that references to ESAs should be retained in the service description until the NBN is rolled out. This will likely be at the end of the next regulatory period," the draft decision said.

"Given the importance of accessing competitive backhaul for the supply of NBN services, the ACCC will continue to monitor the state of competition on backhaul routes from NBN POIs during the period of the DTCS declaration."

The ACCC will also identify mobile backhaul separately in the service description, which will enable regulated prices to be assessed in future; classify transmission services by bandwidth at low, mid-range, and very high capacities; include in the DTCS service description an online ordering capability, head-end aggregation, enhances service monitoring of faults; specify the quality of service requirements; and clarify the meaning of "point of interconnection".

In relation to whether the DTCS applies to Vocus' spur to connect Christmas Island from its Australia Singapore Cable (ASC) submarine cable system, the ACCC said it "applies to particular transmission services provided between two points of interconnection in Australia, irrespective of whether the underlying infrastructure is part of an international network".

"The ACCC therefore considers that the Vocus service is captured by the current DTCS service description and, as such, is subject to standard access obligations (SAOs) and price terms as set out in the current DTCS FAD," it said.

However, it said it is unnecessary to separately identify and price backhaul services from NBN POIs.

In making the draft decision, the ACCC noted changes in the transmission industry since its last declaration, such as TPG's billion-dollar deal to roll out dark fibre to 3,000 Vodafone mobile sites; Vocus, TPG, and Optus connecting to NBN's 121 POIs; and fibre networks rolling out across CBDs.

The ACCC is accepting submissions on the draft decision until February 1, 2019, after first announcing the backhaul declaration review in March.

Last month, the regulator similarly said it will continue regulating six Telstra fixed-line copper services from mid-2019 while the NBN deployment is being completed.

The ACCC is also currently reconsidering its domestic mobile terminating access service (MTAS) declaration, but decided against a peering inquiry in October.

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