Original URL: http://www.theregister.co.uk/2012/05/27/voda_warns_accc_on_backhaul/

Short-lived backhaul declaration better, says Voda

‘Don’t lock in long-term price’, carrier tells ACCC

By Richard Chirgwin

Posted in Networks, 27th May 2012 23:40 GMT

Vodafone is warning the Australian Competition and Consumer Commission (ACCC) against setting backhaul service prices too far into the future, saying that an early review would be better for the industry than a long-term lock-in.

The carrier’s latest submission to the competition regulator’s draft FAD (That's a 'final access determination', not a short-lived craze) says that a review in 12 months is necessary to test the regulator’s proposed domestic benchmark methodology.

Restating its concern that “the proposed domestic benchmarking approach” won’t deliver efficient backhaul pricing over the long term, Vodafone says if prices are set for too long a period, Telstra will be able to extract monopoly rents from domestic backhaul, particularly in regional areas.

Vodafone says it is responding to Telstra’s claim that a short-duration declaration would prevent it signing long-term agreements.

The carrier’s chief criticism of the ACCC’s benchmarking approach is that it ignores discounting, particularly where discounts are offered to capture all of a customer’s business (not just backhaul – ‘whole-of-business’ discounts). “To ignore the impact of discounts is to remove critical information from the DCTS [domestic transmission capacity service]”, Vodafone states in its submission.

Since it believes the ACCC’s data model doesn’t capture real prices, Vodafone claims, “the ACCC cannot be confident the pricing model is delivering economically efficient prices”. ®