ACCC claims broadband speed audit provides needed oversight

The Australian Competition and Consumer Commission (ACCC) has rejected claims from telcos that an audit of Australia's broadband speeds is unnecessary.

In August, the ACCC announced a proposal to develop a monitoring system that would report back to the authority on the types of speeds achievable on Australian fixed networks. The proposal was to include a device installed in the premises of between 1,000 and 12,000 users across Australia to test out the speeds on the network.

The aim, the ACCC said, is to ensure that the claims the telcos are making about the speeds on offer are accurate.

The proposal was widely rejected by the large ISPs, with most questioning the commission's rationale behind such a proposal when it had not demonstrated a need for the testing. Telstra said more work needs to be done to define the problem.

"Telstra is concerned that the ACCC has provided little information about the public policy thinking behind the proposal. The problem is not clearly defined, and it appears that little consideration has been given to the various policy options that might be available to address an identified problem, if one is found to exist," Telstra said in its submission.

"As a result, Telstra is concerned that the specific broadband performance monitoring and reporting program being proposed could lead to a sub-optimal outcome for industry — in terms of costs — and for consumers, who may place reliance on the information reported when choosing an ISP."

Optus said the ACCC has not proven that consumers are currently dissatisfied with the marketing and promotion of speed claims by ISPs.

"Further, customers already have access to a range of online tools that can provide accurate and real-time information on the speed of their service," Optus said.

The Communications Alliance said that in its discussion with the ACCC in September, the ACCC confirmed that it has not conducted any research to determine consumer detriment from the lack of information on broadband speeds.

The alliance questioned why the ACCC is seeking extra funding from the federal government to undertake the proposal.

"Communications Alliance questions whether this is the best use of scarce national funds, particularly in circumstance where — in industry's view — a compelling case for a scheme of this kind has not yet been made, and more cost-effective alternative solutions already exist and/or may be developed."

The proposal does have the backing of the government-owned company rolling out the National Broadband Network (NBN), NBN Co, which said that probe-based testing would produce reliable and useful measurements of the performance of retail broadband services.

Google also said in its submission that it supports broadband measurement as a tool for greater transparency.

"Google believes that the availability of clear and accurate information about broadband internet access services is essential for a free and open internet. Markets rely on information in order to function properly," Google said.

"Transparency systems are becoming an important regulatory tool, so that policy makers can assist in improving the information flows between service providers and users."

In response, the ACCC released an open letter stating that none of the issues raised call into question the potential for implementing such a program. The commission said that contrary to the objections of the telcos, it believes that the broadband market is not competitive enough, and is in need of additional oversight.

"The ACCC considers that the national retail market for the supply of fixed broadband services is not effectively competitive overall. Whilst the retail broadband market exhibits some features of a competitive market, the asymmetry of information between [ISPs] and consumers on service performance prior to contracting is a form of market failure."

The availability of information through broadband comparison sites is also too reliant on information provided by the ISPs, the ACCC said.

"Broadband comparison sites in Australia essentially replicate the information provided by [ISPs] in their marketing materials on their websites in order to give consumers a 'one-stop shop' for choosing a service," the ACCC said, with most websites focusing on price, download quotas, and headline speeds.

"No robust information on the relative performance of different [ISP] services is available."

The ACCC also singled out broadband enthusiast website Whirlpool as being unreliable because the advice given on the site about speeds is "subjective" and would not provide a good overall picture of the performance of an ISP.

The commission said it would continue working with stakeholder groups and look to release a position paper on the proposal in early 2014.