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ACCC chairman pushes broadband speed regulation

The ACCC has proposed updating its guidance to industry and introducing a Broadband Monitoring Program to stimulate competition in the broadband industry.
Written by Corinne Reichert, Contributor

Australian Competition and Consumer Commission (ACCC) chairman Rod Sims has said it is important that internet service providers (ISPs) be forced to publish information on the speeds of their broadband services in order to encourage greater competition in pricing and data inclusions, as well as aid consumers to make more informed purchasing decisions.

The ACCC a year ago suggested monitoring broadband services, with a discussion paper released in July.

According to Sims, the ACCC received more than 400 responses to the issue. Around 390 of those were from consumers, with 80 percent of consumer respondents saying it is difficult to compare the speeds of plans and providers.

"We believe there is a distinct lack of clear information about broadband performance in advertising and other material available to consumers, and there may be a range of factors contributing to this," Sims said in a speech at the CommsDay Summit in Melbourne on Tuesday morning.

"At the moment, the information available to consumers is vague and unquantified and, as many consumers told us, they want to be able to compare 'apples with apples'."

In response to submissions from Australia's major ISPs last month stating that many of the factors affecting advertised speeds are out of their control, Sims said the ISPs are themselves partially to blame for setting "unrealistic expectations" of broadband speeds.

"Let me be clear: I think that industry advertising has contributed to this problem," he said.

ISPs should instead be embracing the challenge as an opportunity, because it gives them an incentive to "differentiate themselves", Sims said.

"It is as much an opportunity as it is a challenge for industry to manage this market transition," he argued.

"There is a very real risk that the momentum industry participants have gained from efforts to turn around net promoter scores will be lost."

The ACCC will therefore assist the change that it said needs to occur through two ways: Updating its guidance to industry on providing broadband speed claims to be more certain and accurate; and introducing its proposed Broadband Monitoring Program to supply consumers with comparisons between broadband services and providers.

Pointing towards the United Kingdom's eight-year-old Ofcom broadband monitoring program, Sims said it will work in the Australian market.

"Looking to overseas experience, we are confident consumers and industry will benefit from the program," Sims said.

It will also help manage disputes over the National Broadband Network (NBN) performance.

"A final, yet fundamental advantage of our proposed Broadband Monitoring Program is to avoid disputes over whether poor performance is the fault of the NBN, or ISPs. With so much being spent on the NBN we need to know if it is delivering, or whether problems are due to ISPs purchasing insufficient capacity to service their customers."

Sims also welcomed the joint submission from the Communications Alliance and the Australian Mobile Telecommunications Association (AMTA), which suggested they create an industry guideline on broadband performance in collaboration with the telco industry, the ACCC, the Australian Communications and Media Authority (ACMA), the Department of Communications, and the Australian Communications Consumer Action Network (ACCAN).

Last month's submissions from Optus, TPG, and Telstra were all against the proposal, with TPG saying the regulator should not step into an area already taken care of through competition, and that ISPs should not be forced to provide information on speeds because many of the factors affecting speeds are out of their control.

"There are a number of factors that affect an end user's perception of 'speed', including the type of technology used, backhaul capacity, end-user hardware and connection method, source of content, distance to exchange, weather, interference, quality of the connection (cable, copper wires). Many of these, as noted in ACCC's Information Paper dated July 2011, are beyond the control of RSPs," TPG pointed out.

"Consumers are, in many instances, not aware of the extent of those issues and often will not understand that local issues, such as underlying computer and network resource consumption that may or may not be known (eg, virus traffic or unknown download traffic), and third-party issues such as congestion at, or a poor quality of, data source, can be affecting their perception.

"These factors limit a RSP's ability to provide representations of actual broadband speed that is likely to be attainable by consumers at their premises."

Telstra's submission also pointed toward the many factors that affect a user's speed, such as "the performance of devices, Wi-Fi or cabling within a consumer's premises, the line speed of the broadband service, the capacity of the backhaul network to cope with changes in aggregate customer demand at different times of the day, and the performance of remote servers and their connections to the internet", making it difficult for RSPs to provide accurate information.

Telstra added, however, that ACCC guidance on speed claims should be updated to allow more flexibility in speed reporting, as well as minimum expectations for such information.

While Optus' submission agreed with the ACCC's objective of ensuring consumers receive clearer information concerning speeds, it said this would likely not be achieved through an increase to the regulatory burden on ISPs.

"There needs to be better recognition of the different factors that influence speed or performance, many of which are outside an ISP's control. A critical first step to delivering this improved transparency is to understand why performance information is largely absent from the market today," Optus said.

All that would result from regulation on the matter is ISPs constantly risking breach of the rules thanks to factors outside of their control affecting speeds, according to Optus.

"Given the technical limitations of legacy-based services, where the length of the copper runs and quality of the copper means that performance can differ on a premise-by-premise basis, it is not surprising that ISPs are reluctant to advertise speeds," Optus said.

"The benefits to be gained from providing performance information are likely to be outweighed by the risks of breaching the ACCC's guidelines and facing enforcement action and reputational damage."

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