Vodafone Calls for Price Cuts on Tasmanian Subsea Cables

Vodafone has asked the Australian Competition and Consumer Commission to review premiums currently chargeable on Tasmanian submarine cables.By Ry Crozier, ITNews
August 21, 2019

Vodafone has made a play for lower internet transmission costs to and from Tasmania by asking the Australian Competition and Consumer Commission to review premiums currently chargeable on the route.

The call for a review was made in a submission to the ACCC’s inquiry into what is known as the domestic transmission capacity service or DTCS, which sets maximum prices that can be charged on transmission routes between domestic locations – for example, capital cities.

Though it mostly affects terrestrial routes, the DTCS also covers routes between the mainland and Tasmania, as well as to other Australian territories, such as Christmas Island.

However, the DTCS recognises that the costs of these subsea cables are much higher than a regular terrestrial route, so operators of these cables are permitted to charge a premium – a percentage on top – to access seekers.

On Bass Strait routes, the premium is 40 percent; on the newer route between Perth and Christmas Island, which is serviced by Vocus, a much larger 360 percent premium is being discussed.

Telstra, which has cables on the Bass Strait route, is unhappy at “the very large difference in uplift factors for Tasmania and Christmas Island.”

“Telstra does not have access to Vocus-specific costs for deploying and operating the cable to Christmas Island,” it said. [pdf]

“However, Telstra would expect that Vocus would face similarly higher costs for deploying and operating marine cable as other owners/operators of undersea cable links.

“Telstra has previously provided information to the Commission on the relative costs of deploying and operating underseas cable to Tasmania. However, the Commission adopted an uplift of 40 percent.”

Telstra went on to say it hoped to see the ACCC “adopt a consistent approach to determining the appropriate rate of return for undersea cable investment it adopted for determining the 40 percent uplift for Tasmania”.

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