australian communications regulation
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Australian Communications Regulation. Michael Cosgrave Group General Manager Communications Group. Australian Communications Landscape 1. - PowerPoint PPT PresentationTRANSCRIPT
Australian Communications Regulation
Michael CosgraveGroup General ManagerCommunications 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, comprising government 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: ???