ACCC to examine effects of NBN, mobile, OTT on communications sector

The Australian Competition and Consumer Commission (ACCC) has announced that it will be conducting a market study into the communications industry in order to ensure that it remains competitive and economically resourceful.

The primary purpose of the market study is to examine new and burgeoning telecommunications trends that are expected to have a significant impact on efficiency and competition in the fixed and mobile network services, core and aggregation network services including IP switching, and over-the-top (OTT) services markets over the next three to five years.

The ACCC will also report on the impact on efficiency and competition of market consolidation, structural changes, and new business models; determine whether competition is impeded by the availability of comparison information on products and services, along with the costs associated with switching service providers; and establish a set of options that would make regulation more effective and appropriate in dealing with these issues.

According to ACCC Chairman Rod Sims, the study is necessary as a result of the "significant" changes that have occurred in the communications market -- including the emergence of the National Broadband Network (NBN) company as the primary fixed-line provider; the widespread availability of OTT providers; the sharp increase in data usage thanks to streaming services such as Netflix; and the "increasing preference" of using mobile data and Wi-Fi rather than fixed-line internet services, particularly with 5G on the way.

"Rapidly evolving technological developments, structural change within the sector, product innovation, and changing consumer preferences are all contributing to this change," Sims explained at the ACCC/AER Regulatory Conference dinner on Thursday night.

"We recognise the communications sector is one that all Australians have an interest in, and one that facilitates economic growth. Importantly, the study will also allow the ACCC to consider a wide range of interrelated issues that have been raised by the sector and that go to the proper functioning of the market.

"The study will examine the changing landscape and identify any issues preventing the use of innovation and investment to deliver the benefits of competition to consumers."

Last year, Optus vice president of Corporate and Regulatory Affairs David Epstein accused telco regulation of failing to keep pace with technology, saying the ACCC, the Australian Communications and Media Authority (ACMA), and the federal government are at odds with each other in regulating the industry, which is having the effect of inflexible, contradictory policy being developed that stymies innovation.

"Effective competition policy is critical to the future economic wellbeing of the nation, and yet the existing institutional structures put in place over two decades ago are failing to keep pace with the complexities and change in technologies that embody the modern digital age," Epstein said in October.

Epstein pointed towards the "best-practice" model in the United Kingdom as the way forward: Employing a single, unified regulator for the telco sector.

"Ofcom in the UK ... operates as the combined competition, pricing, and technical regulator for the communications sector," he explained.

"A similar model deployed in Australia could lead to more consistent, effective, and focused decision-making that reduces costs and provides transparent strategic priorities, as well as a more holistic and common-sense approach to regulation of the sector in Australia."

Epstein said that if the ACCC is not outright disbanded, it could work alongside an Ofcom-modelled communications competition regulator, but with shared rather than conflicting processes.

"Such a regulator could coexist with the ACCC -- possibly sharing commissioners, fundamental guiding principles, or even a supervisory board," Epstein said.

"The political time may be right. A federal government that was embarked on a fresh start, with a renewed sense of common purpose, could simultaneously pick up where Harper left off, draw on several telco-sector reviews, recognise that the ACCC is stretched for the foreseeable future, and begin to look to a world where NBN Co's job is done. This might be a big agenda, but is one a new communications minister could grasp with the backing of a well-informed prime minister."

The ACCC will consult with stakeholders, release an issues paper at the end of August, and publish its draft findings prior to the completion of the market study in 2017.