ACCC kicks off review into voice and SMS mobile pricing regulation

The ACCC is seeking feedback on whether to continue the wholesale price regulation for receiving calls and SMS messages across Australia given the prevalence of OTT services.
Written by Corinne Reichert, Contributor

The Australian Competition and Consumer Commission (ACCC) has kicked off a consultation into whether to continue regulating the service allowing consumers to send and receive calls and messages between mobile phone networks, citing the high use of over-the-top (OTT) services.

According to the ACCC, its domestic mobile terminating access service (MTAS) declaration may need to be amended or revoked because the mobile industry has "changed significantly" since 2014.

"Among the most significant changes are the rollout of the National Broadband Network (NBN), closure of 2G mobile networks and increased investment in 4G/LTE networks, forthcoming deployment of 5G mobile networks, and the imminent entry of a new MNO, TPG Telecom," the ACCC explains in its discussion paper.

"Other developments include the continuing growth of OTT services, and the current pricing of retail mobile services, including calls and SMS."

According to the ACCC, OTT services are not yet considered as full voice substitutes due to the inability to make emergency calls or call 1800/1300 numbers, but the consumer watchdog said "the use of OTT services may reduce the need for SMS regulation to continue".

With TPG also not planning to initially offer traditional voice calls across its new mobile network, launching later this year, this could also be a "strong indication" of the preference for OTT services, the ACCC noted.

The ACCC is seeking feedback on what percentage of voice traffic is now voice over LTE (VoLTE) and voice over Wi-Fi; what kind of voice calls and SMSes require termination access; who can provide the MTAS; and whether the current service description is technologically neutral, fit for purpose, addresses the "issue of monopoly power", and encourages the provision of "innovative services".

It is also asking for submissions on whether smaller carriers have problems reaching commercial arrangements to terminate voice calls on larger networks, and whether they would have enough market power to reach commercial arrangements without regulation; what percentage of SMS traffic is carried by what technology; whether there are wholesale and retail substitutes for voice call and SMS termination; how the ACCC's previous MTAS declaration has impacted competition; whether a continued MTAS declaration would promote competition; and whether MTAS rate reductions have been passed down to consumers.

The ACCC is accepting submissions until September 14.

"We are interested in knowing whether the ability of consumers to choose these ways of communicating means that declaration of the MTAS is no longer necessary," ACCC Commissioner Cristina Cifuentes said on Tuesday.

"Given the pace of technological change in mobile networks, the ACCC will seek to determine whether the service description remains fit-for-purpose and accurate. We also intend to test what effect the declaration of SMS services in 2014 has had on relevant markets, in particular its impact on consumers."

The ACCC had last announced a public inquiry into the MTAS in May 2014 after a lengthy review into the service, with the consumer watchdog revealing its intention to regulate SMS pricing for the first time.

In August 2015, the ACCC then published its final decision, saying that mobile network operators can charge each other and fixed-line network operators 1.7 cents per minute for calls, and 0.03 cents per SMS. That decision holds until June 2019.

The rate to be charged for calls was reduced by more than half -- costing Telstra hundreds of millions of dollars in revenue -- from 3.6 cents per minute, with the ACCC saying it had based its decision on comparative charges around the world.

At the time, Cifuentes had said this price could drop even further once VoLTE services were rolled out.

Both Telstra and Vodafone Australia had objected to the regulation of SMS pricing.

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