Extensive Report on Communications Market Released by ACCC
Monday 30 October 2017 @ 11.24 a.m. | IP & Media | Trade & Commerce
The competition watchdog the Australian Competition and Consumer Commission (the ACCC) announced in late 2016 that it would "run a fine-tooth comb through Australia's communications market" so as to ensure that there was ". . . enough competition to allow new entrants and to encourage investment". A year on and an ACCC Media Release (dated 30 October 2017) indicates that the ACCC has released a draft report detailing its market study of the communications sector which makes 29 recommendations covering a very wide range of competition and consumer issues in communications markets.
Background and Time Line to Report
The ACCC Chairman, Rod Sims initially announced at the ACCC/AER Regulatory Conference in August 2016, that the ACCC’s next market study would focus on the Australian Communications Sector, examining a very wide range of issues concerning competition and efficiency in communications markets, and would require consultation with industry participants and consumers [see our earlier article: ACCC Launches Market Study into Communications Sector]. This was followed, on 5 September 2016, by the release of an issues paper regarding the communications sector and a media release relating to the ongoing market study [see ACCC Releases Issues Paper for Communications Market Study].
The issues paper outlined the following areas of proposed to exploration as part of the "communications sector market study" - note the issues discussed in the paper were intended to be a guide and were not exhaustive:
- Consumer trends and issues;
- Emerging services;
- Fixed line voice and broadband services;
- Mobile voice and broadband services;
- Interaction between fixed line and mobile services; and
- Core and transmission networks and services.
The ACCC's one year market study saw wide consultation "with a wide range of industry participants and consumers" according to the ACCC. This according to the ACCC, included the consideration of 64 submissions and over 1000 responses to a consumer questionnaire as well as a two day industry forum.
The Market Study Time Line
Submissions were due to the ACCC on the issues paper by 14 October 2016 and a draft report was due to be released in July 2017 with a final report to be produced by November 2017.The draft report has now been released as of 30 October 2017. The ACCC is now asking for comments on the draft report by 8 December 2017 and expects to release its final report early in 2018.
The Draft Report's Key Recommendations
Generally, the draft report indicates that the market study found that strong price competition existed between the major service providers, despite considerable concentration in both fixed and mobile retail markets. Competition is expected to increase with the launch of TPG's own mobile network and with Vodafone set to offer services over the NBN. In a the Report's Media Release the ACCC Chairman is quoted as saying:
Key recommendations coming out of the report are in relation to:
- connection and activation issues as consumers transition to the NBN,
- NBN pricing and speed claim issues,
- the competitiveness of smaller service providers and
- issues flowing from new technology such as 5G.
An area highlighted by the draft market study is the consumer experience issues related to connecting to the NBN and fault rectification. The draft report indicates that the ACCC is concerned that ". . . NBN wholesale service standards are precluding consumers from obtaining redress in the event of delayed connections and faults. Commenting on this the ACCC Chairman has indicated there will be closer examination and a possible ". . . regulatory response" if it is necessary to improve consumer services.
A key matters examined closely in the draft report was the experience of consumers receiving slower-than-expected internet speeds and this included looking at NBN Co’s pricing of the services it provides to Retail Service Providers (RSPs). Concern is expressed at the level of Connectivity Virtual Circuit (CVC) provisioning and its contribution to poor speeds experienced by households and businesses - also RSPs are saying that CVC pricing is affecting the uptake of higher speed services by consumers.
The advertising by RSPs and consumer understanding of new broadband plans as they are rolled out of the NBN remains problematic and complex.
Another finding of the draft report was the competitiveness of smaller service providers which may be impeded by their access to key wholesale inputs used to offer services on the NBN, such as aggregation services.
The draft report for the market study also noted the rapid pace of technological development which includes: investment in data centres; content delivery networks; cloud services; the Internet of Things; and the anticipated rollout of 5G mobile networks. 5G in particular is seen as offering "significant opportunities for industry and consumers", but also, it has the potential to disrupt existing business models, for example, by increasing substitution from fixed internet services to wireless, thereby affecting the ability of NBN Co to recover its costs. The ACCC does not see the latter as a case for regulation which reduces competition with the NBN, nor a reason for supporting a Regional Broadband Scheme levy being extended to wireless.
What's Next
As already indicated the ACCC is now asking for comments on the draft report by 8 December 2017 - contact details, previous submissions and the draft report are available here.
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