ACCC endorses network congestion pricing

Australian Competition and Consumer Commission (ACCC) chairman Rod Sims has welcomed a proposal by Telstra for internet service providers to begin looking at charging for services on data speed tiers.

Telstra's group managing director of products, marketing, and innovation, Kate McKenzie, this week called for the telecommunications industry to debate the merits of network operators managing traffic by charging customers based on the speed and time they wanted to use the service rather than just the data.

Sims said in a speech to the Australian-Israel Chamber of Commerce in Brisbane on Thursday that he advocated the telcos looking into traffic management practices.

"As a long time advocate of congestion pricing for a range of other infrastructure networks, I welcome this call," he said. "Australians are consuming more audiovisual content than ever before, and providers are diversifying the ways in which they deliver the content depending on the type, scale, and reach of the services they are providing."

"These developments have the potential to stimulate pro-competitive outcomes, and increase consumer choice and quality of experience. This additional content, however, requires capacity, which can cause network congestion."

But he warned that while traffic management tools could be helpful to reduce congestion, it could also harm competition from over the top players whose traffic would be regarded as a lower priority.

"Where traffic management practices are implemented, however, network providers should ensure that such practices are transparent and customers can easily understand the implications of these practices on the service they receive," he said.

"In addition, given the rate of change in these markets and the potential for some players to use market power in one market to gain leverage in another, markets can tip toward anti-competitive structures and outcomes in a very short space of time. There is a risk that the current diversity of services and participants could quickly dissipate or consolidate."

Telstra has begun trialling throttling peer-to-peer services for ADSL customers in a small part of Victoria. The company did not reveal this to the public, however, until it was leaked to the media.

Telstra was also the subject of another concern of Sims. He said that this year, the ACCC will review fixed services and determine for how much longer the ACCC needs to regulate the services over Telstra's copper network.

The rollout of the National Broadband Network (NBN) in its current form will see customers move off the copper network over to the NBN. While this would remove the need for the network to be regulated at the end of the NBN rollout, Sims noted that Telstra may seek to argue that wholesale ADSL prices need to rise in order to accommodate the reduction in customers on the network.

"Telstra is likely to argue that, with the NBN rolling out, prices will need to rise as fewer services will be supplied over the same infrastructure," he said. "Alternatively, competitors may argue that the values of Telstra's assets need to be reduced to reflect their increasing obsolescence."

He noted, however, that this all may change after the September 14 federal election.