Telstra has benefited from government inattention to competition in the telco sector, according to Vodafone.
In a submission (PDF) to the Competition Policy Review made public on Friday, Vodafone suggested the creation of a “high-powered” new government entity to promote competition in telecom and other sectors that require closer regulation.
As Optus had in a submission released earlier this month, Vodafone voiced dissatisfaction with the Australian Competition and Consumer Commission (ACCC)’s ability to regulate the telecom sector.
Vodafone said that Australian productivity has stagnated in the 20 years since the Hilmer Review in 1993.
“Key sectors such as telecommunications that should be driving productivity growth are not realising their full potential,” the number three telco said.
Regulatory and policy decisions have “assisted those with market dominance to be protected from competition.”
A new competition watchdog could independently advise state and Commonwealth governments and formally review all relevant regulation, Vodafone said.
The entity would also provide oversight to the ACCC by reviewing “whether allegations of misuse of market power are appropriately being assessed by the ACCC to ensure that competition and investment are maximised.”
Under Vodafone’s plan, the ACCC would have to write an annual report setting out objectives for each concentrated sector and explaining how individual decisions are consistent with the ACCC’s overall objectives.
Every year, the competition review entity would review the ACCC report and independently audit any key ACCC decisions to ensure they conform with best regulatory practice, it said. This audit would be made public and the ACCC would be required to respond, Vodafone said.
Vodafone suggested that the entity be created by merging the National Competition Council with the Productivity Commission.
Optus also complained about the effectiveness of the ACCC in its own submission to the competition review.
The ACCC can regulate access to infrastructure, but this doesn’t address competition issues that are separate to ownership of infrastructure, the number two telco said. The ACCC should have a “more flexible range of powers” so it can address other types of competition issues, it said.
Optus said Australia should follow a regulatory model similar to that of the European Union that focusses on operators with significant market power.
“Importantly it provides regulators with a broader range of remedies that can be used to address impediments to competition associated with that market power,” Optus said.
“This includes traditional access remedies, but it also includes other measures that can be applied in a proportionate way depending upon the specific circumstances.”
Those measures include retail price controls, including measures to preclude bundling; non-discrimination obligations; and various forms of internal separation, including functional and structural separation, Optus said.
The competition review has not yet released any submission by the ACCC. However, in a speech today the CEDA conference in Canberra, ACCC Chairman Rod Sims agreed that Australia must reinvigorate competition.
“Australia’s low productivity, calls for Australia to create ‘national champions’, or to allow industries to consolidate in response to low investment returns, and the privatisation of assets in ways that hinder future competition to maximise one-off gains, all suggest that Australia has lost a lot of the pro competitive culture that it gained from the 1990s National Competition Policy,” Sims said.
Sims proposer conducting market studies to get a closer understranding of how sectors, markets and market practices are working.
“Parties often bring concerns to the ACCC which the ACCC cannot act on unless we believe there has been a breach of our Act,” he said. “Having a market studies power could allow the ACCC to better determine if there are or are not problems which should be addressed.”
At the close of the quarter ending 31 March, Vodafone had 4.96 million customers on its mobile network, about one million fewer than the year before. Optus had 9.43 million customers at the end of 31 March.
By comparison, Telstra had 15.8 million retail mobile customers at the end of 31 December.