Regulating competition in the Regulating competition in the mobile telecommunications mobile telecommunications

marketmarket

AMTA Conference AMTA Conference

25 & 26 September 200325 & 26 September 2003

Chris PattasChris Pattas

A/g General Manager A/g General Manager

TelecommunicationsTelecommunications

ACCCACCC

OutlineOutline

State of Competition in Mobile Market State of Competition in Mobile Market

Mobile Services ReviewMobile Services Review

Next Generation Networks and ACIFNext Generation Networks and ACIF

Internet Interconnection InquiryInternet Interconnection Inquiry

Legislative ChangesLegislative Changes

State of competitionState of competitiona bit of history…a bit of history…

Pre 1991: Telecom and OTC government run Pre 1991: Telecom and OTC government run monopoliesmonopolies

1991: Telecom / OTC merged into Telstra 1991: Telecom / OTC merged into Telstra 1991 and 1992: Optus and Vodafone granted 1991 and 1992: Optus and Vodafone granted

licenceslicences 1997: full competition introduced1997: full competition introduced

Emerging competitionEmerging competition

More service providersMore service providers

Greater range of products available to Greater range of products available to

consumersconsumers

Incentives for innovationIncentives for innovation

Greater competitionGreater competition

Mobile market – price changeMobile market – price changePrice index for mobile services,

1997-98 to 2001-02

84.3 78.6 76.796.2100

020406080

100120

1997-98 1998-99 1999-00 2000-01 2001-02

Financial year

ind

ex

Mobile market – price changeMobile market – price change

Year-on-year change in prices for mobile telephony services, 1998 to 2002

-3.8

-12.3

-6.7

-2.5

-15

-10

-5

0

1998-99 1999-00 2000-01 2001-02

Financial year

% c

ha

ng

e

Mobile market Mobile market

Four carriers, six networks, numerous Four carriers, six networks, numerous resellers, hundreds of services plansresellers, hundreds of services plansTelstra has 43.5% share of mobile Telstra has 43.5% share of mobile market. Optus 32.6%, Vodafone 18.3%, market. Optus 32.6%, Vodafone 18.3%, Hutchison 5.6%Hutchison 5.6%Market concentration greater than that Market concentration greater than that of equal sized triopolistsof equal sized triopolistsIncentives and ability still exist to keep Incentives and ability still exist to keep mobile termination above costmobile termination above cost

Mobile Services ReviewMobile Services Review

1997: declaration of mobile origination 1997: declaration of mobile origination and termination services and termination services

2001: pricing principles released2001: pricing principles released

April 2003: inquiry into regulation of April 2003: inquiry into regulation of mobile telephony commencedmobile telephony commenced

Reviewing not only declared services Reviewing not only declared services but the provision of 3G, domestic and but the provision of 3G, domestic and international roaminginternational roaming

Next Generation NetworksNext Generation Networks

ACCC participating in ACIF considerations ACCC participating in ACIF considerations of appropriate regulation of NGNsof appropriate regulation of NGNs

Encouraging industry to resolve Encouraging industry to resolve interconnection arrangements on owninterconnection arrangements on own

Encouraging industry to reach a Encouraging industry to reach a consensual view of its own on what form of consensual view of its own on what form of regulation is most appropriate for NGNsregulation is most appropriate for NGNs

Internet Interconnection InquiryInternet Interconnection Inquiry

ACCC previously considered internet ACCC previously considered internet interconnection arrangements under Part XIBinterconnection arrangements under Part XIBCurrent Inquiry under Part XIC prompted by - Current Inquiry under Part XIC prompted by - continued complaints to ACCCcontinued complaints to ACCC

- recommendation from broadband - recommendation from broadband advisory group to Minister advisory group to Minister

- industry - industry Issues include peering and fee arrangements Issues include peering and fee arrangements between Tier 1 ISP’s and smaller ISP’s between Tier 1 ISP’s and smaller ISP’s

LegislativeLegislative changes changesDecember 2002 – Telecommunications December 2002 – Telecommunications Competition Act 2002 Competition Act 2002

Main changes:Main changes:Removal of merits review of Commission Removal of merits review of Commission decisions in arbitrations;decisions in arbitrations;Publishing of model terms and conditionsPublishing of model terms and conditionsVoluntary access undertakingsVoluntary access undertakingsOperation of Standard Access ObligationsOperation of Standard Access ObligationsAnti-competitive conduct provisionsAnti-competitive conduct provisionsAccounting separationAccounting separation

ConclusionConclusion

Evolving competition due to new Evolving competition due to new technologies, services and deregulationtechnologies, services and deregulationMobile markets are the most competitive of Mobile markets are the most competitive of all Australian telecommunications markets – all Australian telecommunications markets – but there are still concernsbut there are still concernsRegulation of existing mobile services will Regulation of existing mobile services will depend on outcome of the current inquiry depend on outcome of the current inquiry and assessment under TPAand assessment under TPARegulation of new and emerging services Regulation of new and emerging services dependent on structure of markets and ability dependent on structure of markets and ability of industry to resolve complex of industry to resolve complex interconnection issues on its owninterconnection issues on its own