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ACCC suggests monitoring broadband services

Australia's consumer watchdog has outlined plans to push monitoring broadband performance, saying it would improve quality and pricing thanks to competition.
Written by Corinne Reichert, Contributor

The Australian Competition and Consumer Commission (ACCC) has added its voice to the telecommunications industry's calls for equal access to data services, saying that while it already attempts to level the playing field by regulating wholesale pricing and competition, it also plans to begin pushing a scheme whereby it would monitor and report back on broadband performance.

The ACCC is "pursuing the long-term interests of end users in regulating communications markets", according to chairman Rod Sims, who spoke at the annual Australian Communications Consumer Action Network (ACCAN) national conference on Tuesday.

Sims pointed out that effective price per 1GB for broadband services has already decreased, from AU$40 per 1GB in 2007 down to AU$1 per 1GB now. He said that monitoring long-term price and service regulations, similar to programs adopted in the United Kingdom, the United States, Singapore, New Zealand, and Canada, would encourage further transparency and competition.

"Since late 2013, the ACCC has consulted on the possible introduction of a fixed broadband performance monitoring and reporting program in Australia. We have looked at the technical and commercial aspects of such a program, and anticipate this work will be published in the near future," Sims said in a statement.

"A broadband performance and monitoring program would promote competition and consumer outcomes by providing transparency over the quality of broadband services that are on offer to consumers. Consumers need this information to help them select the most appropriate service for their needs, and to confirm they are likely to be getting the service for which they are paying."

The ACCC already polices competition within the sector, having overseen and ultimately approved the Optus-NBN deal and the TPG-iiNet merger over the past few weeks, after determining that both would improve the industry landscape for consumers.

The latter deal, worth around AU$1.5 billion, will see TPG acquire 100 percent of iiNet's shares, and will result in TPG becoming Australia's second-largest fixed-line telco after Telstra, increasing its customer base to 1.7 million. TPG will pay AU$9.55 per iiNet share, incorporating a AU$8.80 cash or scrip consideration and AU$0.75 cash per share.

"Many of you will be aware of the ACCC's recent decision on the acquisition by TPG of iiNet," Sims said on Tuesday. "The ACCC cleared the acquisition after closely scrutinising the competition effects in the fixed-line broadband market. We also looked at its impact on the wholesale transmission market, otherwise known as backhaul.

"With the acquisition, the number of major suppliers in the fixed broadband market will reduce from five to four. TPG will be the second-largest supplier, with a market share of 27 percent, behind Telstra (41 percent), and ahead of Optus (14 percent)."

He added that due to the continuing high level of competition within the fixed-line market from Telstra, Optus, and M2, the TPG-iiNet merger would not limit this -- as long as no other acquisitions are permitted in the future between these four companies.

"We took comfort that TPG would continue to face three major competitors after the acquisition. Clearly, we would have no such comfort in the case of any subsequent proposed acquisition involving any two of Telstra, Optus, TPG, or M2, as things stand."

In regards to the Optus-NBN deal, wherein Optus' hybrid fibre-coaxial (HFC) customers will be transitioned onto the fixed-line National Broadband Network (NBN), and parts of the telco's network will be progressively acquired and integrated within the NBN, the ACCC said it would not reduce competition.

"The ACCC's assessment turns on the extent to which Optus and NBN Co are likely to compete absent the proposed acquisition," Sims said at the time.

"Regardless of whether the proposed acquisition occurs or not, we judged that Optus and NBN Co would not compete with each other.

"As a result, the ACCC concluded that the proposed acquisition is unlikely to substantially lessen competition in any relevant market."

The original deal between NBN and Optus had been approved by the ACCC in 2012, but Optus and NBN entered into a revised AU$800 million deal in December last year, as a result of the Coalition government moving from a full fibre-to-the-premises (FttP) approach to a combined FttP, fibre-to-the-node, fibre-to-the-basement, fixed-wireless, and HFC network.

The ACCC last week also published its wholesale price regulation for receiving calls and SMS messages across Australia. It cut the rate to be charged for calls by more than half, from 3.6 cents per minute down to 1.7 cents, and for the first time began regulating the wholesale cost that network operators can charge each other to receive text messages across networks, stating that this would be 0.03 cents per SMS.

The ACCC said its decisions were based on comparative charges around the world after announcing its public inquiry into the Mobile Terminating Access Service (MTAS) in May last year, following a lengthy review into the service.

Sims said on Tuesday that he hopes this price cut between telcos will be subsequently passed on to users, reflected either through lower rates charged for prepaid and post-paid plans, or through more services being provided for the same amount of money.

"While these rates are for wholesale services, we expect the reductions to be passed on to consumers through lower call or SMS rates or through more inclusions in plans," he explained at the ACCAN event.

"Affordability was a key consideration in our decision to regulate SMS termination, as we had observed that the majority of SMS offers available to low spend consumers were priced well above the cost of providing the service."

ACCC commissioner Cristina Cifuentes had said in August that these prices could drop even further once voice-over-LTE (VoLTE) technology services are rolled out in the future.

"The ACCC will monitor the planned roll out of voice over 4G technology, which could be as soon as later this year. If there is evidence of voice over 4G take-up which affects the costs of terminating calls on Australian networks, the ACCC may review the regulated rates," she said.

The new pricing will take effect from January 1, 2016, and will remain valid until June 30, 2019.

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