The Australian Competition and Consumer Commission has released a draft proposal to declare a Superfast Broadband Access Service (SBAS) in a bid to prevent any localised monopoly on provisioning.
Superfast broadband services are supported by fibre-to-the-premise (FTTP) and fibre-to-the-basement (FTTB), hybrid fibre coaxial (HFC) and very high-bit-rate digital subscriber line (VDSL). The main providers offering superfast services include Telstra with its FTTP networks in South Brisbane and Velocity estates; iiNet with its VDSL network in the ACT and HFC networks in regional Victoria; and TPG and Spirit Telecom with their FTTB networks.
NBN services, HFC networks transferred to NBNCo and services under the Local Bitstream Access Service declaration, do not apply as they are regulated under the Competition and Consumer Act 2010.
The ACCC’s concern is that a localised monopoly could happen unless regulation around access to networks is put in place.
“For example, the level of competition in the supply of retail broadband services in the South Brisbane exchange area appears to have diminished since Telstra replaced its existing copper network with a fibre-to-the-premises network and the originally agreed rebates on its wholesale FAB product expired,” the ACCC wrote in its draft paper.
“Specifically, since the expiry of the rebate, Telstra has charged higher wholesale access prices, which has led both to higher retail prices for end users – Exetel’s retail offering is $20 per month more expensive since the rebate expired – and also to less choice in retail service providers as access seekers have exited the market.
“Further, there is some evidence that the higher access charges have meant that retail service providers have been unable to compete with Telstra. For example, Exetel, which markets itself as a low-cost provider of broadband services, is offering a retail plan in South Brisbane that is more expensive than Telstra’s. Similarly, iiNet is currently providing retail services over its VDSL network in the ACT at between $9 and $15 less than its wholesale customers.”
The ACCC said declaring an SBAS where there’s only one retailer of superfast broadband services in some areas will allow for more competition for end users, both in terms of innovation and product differentiation and in price.
“Greater availability of superfast broadband access services through declaration may also promote some competition at the wholesale level and may therefore result in some dynamic efficiency gains,” the watchdog stated.
One issue of declaring an SBAS, however, is that some service providers’ costs of complying with the declaration might end up disproportionately greater than the competition and efficiency gains from an SBAS. The ACCC said it is open to considering exemptions for providers, especially smaller players, where this would be the case.
“Alternatively, the ACCC could exempt all smaller carriers from the declaration by setting a threshold network size in the service description, below which the declaration does not apply. At this stage, the ACCC has not identified any threshold level of subscribers or potential subscribers below which the costs of supplying an SBAS would outweigh any competition gains.”
The ACCC is seeking submissions from industry on the costs likely to occur if service providers had to comply with the declaration and help in coming up with a reasonable threshold network size.
Submissions close on 4 December 2015.
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