ACCC to scrutinise backhaul market competition

Competition body to assess whether regulation still needed

The Australian Competition and Consumer Commission has launched a public inquiry into whether it will continue to regulate elements of the backhaul market.

The ACCC said today that the inquiry would review its declaration of the Domestic Transmission Capacity Service (DTCS). Declaring a service allows the ACCC to regulate access to a telecommunications service.

The ACCC first stepped into regulate the DTCS in mid-1997. Since then it has extended or varied the declaration in 1998, 2001, 2004, 2009, 2010 and 2014.

The DTCS declaration is due to expire on 31 March 2019.

Since the commission last reviewed the DTCS, there “have been a number of changes to the technological, commercial and regulatory landscape of the communications sector in Australia,” an ACCC discussion paper notes.

Those changes include the continuing rollout of the National Broadband Network (NBN), ongoing consolidation in the communications market (including significant acquisitions by TPG and Vocus), and improvements to the capabilities of wireless technologies.

Significant network investments since 2014 include TPG’s roll out of fibre to 3000 Vodafone mobile sites and Vocus, TPG and Optus connecting to almost all of the NBN Points of Interconnect (POIs).

The backhaul market is now dominated by four vertically integrated providers, the ACCC states: Telstra, Optus, TPG and Vocus.

“The ACCC has maintained regulation of the DTCS in areas where it is not satisfied that there is effective competition or contestability and removed regulation in areas that have been found to be competitive,” the discussion paper states.

“Since the DTCS was last declared there has been significant concentration in the industry as the larger providers become more vertically integrated,” it adds.

“This has enabled the larger transmission providers to extend the geographic reach of their transmission networks.”

In addition, the rollout of the NBN has “changed many market factors,” including concentrating services at the POIs.

“While the market dynamics are constantly evolving it remains likely that there will be a need to maintain some DTCS regulation in areas where competition is less developed,” the discussion paper states.

“As part of this inquiry we will examine competition in transmission at NBN points of interconnection, as these transmission services are essential in carrying traffic between the POI and a service provider’s network,” ACCC chairperson Rod Sims said.

“It is important to review the scope of our regulation to determine whether the way in which we describe the regulated service adequately reflects the manner in which transmission services are currently being sold and purchased,” Sims said.

“If the market has changed to a significant extent, we will examine whether other service features should be included in the service description.”

The ACCC is accepting submissions until 13 April.

The ACCC in October last year decided against introducing a regulated mobile roaming regime. (Vodafone lost a subsequent legal battle over the decision.)

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Tags NetworkingbackhaulAustralian Competition and Consumer Commission (ACCC)

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