Vocus lands concession on Christmas Island cable pricing

Vocus has secured regulatory support to charge more for capacity on its subsea fibre link connecting Perth and Christmas Island, after complaining that initial prices were underdone.

The Australian Competition and Consumer Commission (ACCC) said late Wednesday that Vocus would be allowed to charge “a monthly price of $52,366 per Gbps for the subsea component of [domestic transmission] services to Christmas Island.”

The ACCC regulates the prices of cables used for domestic data transmission. 

This mostly affects terrestrial cables on the mainland, though selected subsea routes to Australian states and territories - including Tasmania and Christmas Island - are considered domestic routes.

Given subsea routes are much more expensive to build and maintain, however, the ACCC allows operators to charge an “uplift” or multiplier on the standard terrestrial pricing.

Vocus has been able to charge a 360 percent uplift, equivalent to $42,086 per Gbps per month.

The ACCC had proposed to increase it to $46,695 per Gbps per month; however, Vocus argued it should be higher to “reflect a higher allocation of ASC [Australia-Singapore Cable] costs to the Christmas Island spur project.”

In other words, because Vocus’ Christmas Island cable would not exist unless Vocus’ longer ASC cable passed near the island, regulated pricing should reflect a portion of the total cost of the ASC project as well.

The ACCC wound up agreeing with Vocus, and will raise the regulated cost to $52,366 per Gbps per month.

“Based on the revised final monthly price of $52,366 per Gbps for the Christmas Island service, the ACCC’s final decision is that this price be set as an uplift of 470 percent of the price for an equivalent mainland [domestic transmission] service and that this uplift will apply to all capacities for which price is regulated (that is, from 2Mbps to 1Gbps),” the ACCC said. [pdf]

The ACCC noted that “much of the information it has assessed in forming its position is confidential or commercially sensitive” - and indeed the published report contains a large amount of text for which commercial in-confidence is claimed.