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Australian Communications Regulation. Michael Cosgrave Group General Manager Communications Group. Australian Communications Landscape 1.
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Australian Communications Regulation Michael Cosgrave Group General Manager Communications Group
Australian Communications Landscape 1 • Australian demography – need to provide services to a population congregated in cities separated by long distances, while also reaching remote areas • Network characterised by customer access network comprising long loop lengths in rural areas – service equity issues between metropolitan and non-metropolitan areas more acute as a result • Access networks also include cable, satellite and wireless, but weak inter-modal competition • Market structure issues similar to those in some European jurisdictions
Australian Communications Landscape 2 Telstra Corporation: vertically integrated single incumbent • Leading market share in fixed line, mobile, cable and xDSL • Has continued degree of market power across most telecommunications markets • Ability to leverage market power into new markets • Increasingly aggressive US management team since mid 2005, lobbying government against regulation
Australian Communications Landscape 3 • Most competitors dependent on access to Telstra infrastructure to participate in fixed-line retail markets, while at the same time competing against Telstra’s vertically integrated retail business • Quasi-infrastructure competition developing through access to Telstra’s network, eg: Unbundled Local Loop Service (ULLS) • ULL is enabling competitors to mitigate reliance on Telstra through investment in DSLAMs which provide broadband and voice through the ULLS
Australian Communications Landscape 4 • Incumbent remained majority Government owned until late last year • In mid 2006, Federal Government implemented a form of operational separation of Telstra but this is subject to government rather than regulatory oversight • Broadband: a “second order” election issue in 2007
Regulatory Regime 1 • ACCC: Independent statutory authority, formed in 1995, administers the Trade Practices Act 1974 (TPA) and other acts • Regulates national infrastructure services, including communications, and also energy, rail, airports and water • Regulation required to strike a balance between ensuring that investors are not discouraged from undertaking new investment, while at the same time ensuring that consumers obtain the benefit of competition
Regulatory Regime 2 • ACCC is both a Competition Authority and Regulator • TPA contains telecommunications specific provisions to address anti-competitive conduct and facilitate access regime • Provisions supplement general anti-competitive conduct and access provisions in TPA to facilitate speedier response to issues of concern in fast moving communications markets
Regulatory Regime 3 • Under this regime, ACCC has both ex post investigative powers and ex ante competition/access price regulatory powers • Access regulation is based on the negotiate/arbitrate model and price signalling rather than price setting for input services • Abuse of market power investigations in this sector tend to focus on price squeezes - typically difficult to prove in court (cf. French decision)
Current issues 1 • Next Generation Networks and Broadband service development are big issues in Australia – fibre • Development of NGN raise issues relating to the timing of deployment and the regulatory arrangements that will apply to the network • FTTN proposals have been put forward by Telstra and G9. consortium of telecommunications companies • G9 involves a consortium rolling out fibre to the node using the incumbent’s copper – unique proposal
Current issues 2 • Telstra withdrew its proposal in August 2006 over disagreements about pricing of the legacy network • G9 has submitted a Special Access Undertaking in relation to prices for wholesale access– released for public debate • Incumbent’s FTTN proposal emerging as a result of ULL competition rather than intermodal competition
Current issues 3 • Government response – moving towards a competitive tender environment • in urban areas, high-speed fibre broadband network infrastructure will be rolled out following a competitive bids process • In rural areas, Government awarded $958 million to joint venture for building 12mbps wholesale broadband network • Process will be assisted by an Expert Taskforce, comprisinggovernment and business representatives, including the ACCC
Current issues 4 • Different regulatory implications depending on who wins the tender – not necessarily a beauty contest between two existing FTTN proposals • If incumbent is selected: • Access arrangements, particularly pricing • overall regulatory regime • Functional (operational) separation review • If G9 consortium model: • Cutover • Protection from overbuild • Other potential tenderers: ???