Essential services – Telecommunications
Competition and consumer issues arising from the pricing and selling of essential services, including telecommunications, have continued to be a key enforcement priority for the ACCC last year. This has received even greater focus in light of rising inflation and the spotlight on the increasing cost of living. The ACCC also showcased its awareness of the changing technological and market landscape through its consideration of the future of regulation of telecommunications services.
2023 enforcement priorities
The ACCC was concerned with the vulnerability of Australian consumers to the effects of anti-competitive conduct and unfair trading practices by businesses that reduced competition, restricted entry or expansion of competitors, reduced choice and contributed to price escalation pressures. It was hopeful that several matters under investigation at the start of the year would lead to “more successful” outcomes than in the previous year.
Despite the hope expressed by the ACCC, it only took one significant enforcement action last year (successfully blocking the Telstra and TPG regional network deal) and instead largely continued in its role of monitoring the sector. The ACCC:
- accepted NBN Co’s latest proposed variation to its Special Access Undertaking which will likely promote competition and the long-term interests of consumers; and
- regularly monitored NBN retailers about their retail price changes.
Having said that, it appears that the ACCC’s approach is having a positive impact on the growth of the market share of smaller telco and broadband providers, increased flexibility for consumers to choose suitable plans, and increased reliability of download speeds with improved fixed wireless connections.
"We want to know if recent developments including investments in optical fibre, the completion of the NBN and declining usage of Telstra’s copper network mean that competition is protecting customers and what that means about whether or how we should regulate these services. We will also look at the impact of newer technologies such as instant messaging and video conferencing apps on relevant telecommunications services, and what it means for regulation."
ACCC Commissioner, Anna Brakey
Major developments and activities
NBN's new Special Access Undertaking
Variation to the regulation of the NBN
In October, the ACCC accepted NBN Co’s latest proposed variation to its Special Access Undertaking (SAU). The decision follows NBN Co’s withdrawal of its November 2022 proposal that the ACCC had previously rejected in a draft decision in May 2023.
The SAU which began in December 2013 plays a central role in regulating the NBN, setting the rules for broadband providers to access the NBN. The variation to the SAU accepted by the ACCC includes measures that are designed to protect and promote the long-term interests of consumers who rely on the NBN for their broadband access. In particular, these include measures to:
- protect consumers from sharp price rises by restricting annual increases in NBN Co’s average wholesale price to no more than the change in the Consumer Price Index;
- reduce barriers to entry for new retailers through improved certainty of prices; and
- fix systemic issues that drive poor NBN consumer experience via new commitments for further consultation and public reporting on service performance improvements.
In announcing the ACCC’s acceptance of the variation to the SAU, the ACCC noted,
"The NBN is a critical piece of national infrastructure that is central to Australia’s digital economy …We are satisfied that NBN Co’s latest SAU variation proposal promotes the long-term interests of Australians, which is the primary objective of the test that we have to apply."
Telstra – TPG application to Australian Competition Tribunal rejected
Success in the Australian Competition Tribunal
In June, the Australian Competition Tribunal denied Telstra and TPG’s appeal against the ACCC’s rejection of their proposed regional spectrum authorisation arrangements. The companies had originally sought to share Telstra’s radio access network for 4G and 5G services in certain regional areas, arguing it would benefit customers in several respects. However, the ACCC believed it would reduce the ability and incentive for mobile network operators to invest in infrastructure in regional and rural areas and refused to approve the deal in December 2022. The Tribunal agreed with the ACCC, finding that the arrangement would strengthen Telstra’s market position, discourage Optus from investing in 5G technology, weaken competition, and potentially increase prices.
The Australian Competition Tribunal noted that the proposed Telstra and TPG deal,
“provides Telstra with substantial commercial and competitive benefits and would further increase Telstra’s position of market strength in mobile telecommunications markets”.
Inquiry into regulation of telecommunications services
ACCC reviews nine wholesale services
In May 2023, the ACCC commenced a public inquiry into the ongoing regulation of nine wholesale telecommunications services. Generally, access to telecommunications services is unregulated in Australia unless the services are ‘declared’. This means that the supplier of the service must allow other providers to access it upon request and follow the ACCC’s price and non-price terms and conditions. The nine services under review included: access to Telstra’s legacy access network for voice calls, the resale of analogue fixed-line phone services, data transmission and ADSL resale. The inquiry considered whether the ongoing regulation of these services promotes the long-term interests of Australians.
In December 2023, the ACCC published a draft report, proposing to: extend the declarations of the domestic mobile terminating access service and the domestic transmission capacity service for a further five years with variations to the service descriptions; extend the declarations of the wholesale line retail, local carriage service, wholesale ADSL, fixed originating and terminating access services for a further five years with no variations to the service descriptions; and allow the declarations of the unconditioned local loop and line sharing services to expire without making a new declaration. The ACCC has invited responses to the draft report before 16 February 2024. A final report is expected by the end of March 2024.
Regulatory activity over the past year highlights the ACCC’s priority of monitoring the industry as a way to encourage improvements in services to consumers, promote competition, and regulate pricing of essential telecommunications services. As cost of living pressures persist, we expect the ACCC to continue to prioritise its resources towards the monitoring of pricing, competition and competitive safeguards and quality of service issues in the broader telecommunications industry in 2024. Proposed regulatory changes will be watched closely by industry participants and have the potential to deliver real benefits for consumers such as cheaper plans, more choice of provider and greater flexibility.
Read more from ACCC Year in Review
We look at the ACCC’s leading cases and other policy and regulatory activities throughout the year and then evaluate how well the ACCC performed against its ongoing enforcement priorities.
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