Network operators have called for the Australian Competition and Consumer Commission to back away from proposed rules that would allow the ACCC to collect a range of new data about the state of Australia’s dark fibre and NBN wholesale aggregation markets.
The ACCC’s 2018 report into the state of Australia’s telco market said that the information the commission had gathered suggest there was “limited competition in the supply of dark fibre services” including to NBN points of interconnect (POIs).
The ACCC said that as a result of concerns over the “slow development of the wholesale markets for NBN aggregation services and dark fibre availability” it would consult with the telco sector on implementing new record keeping rules (RKRs).
“The RKR will provide useful transparency on the performance of the wholesale aggregation and dark fibre markets and the information necessary to determine whether any regulatory intervention is required,” the report said.
Section 151BU of the Competition and Consumer Act 2010 empowers the ACCC to “by written instrument, make rules for and in relation to requiring one or more specified carriers or one or more specified carriage service providers to keep and retain records.”
The section allows the ACCC to require that telcos “prepare reports consisting of information contained in those records” and provide them to the commission. (One example is the ACCC’s Internet Activity RKR, which compiles a range of data from Internet service providers about connection types and download volumes.)
In February the commission formally launched a consultation on two proposed new RKRs focused on dark fibre and NBN wholesale aggregation services (which combine the wholesale supply of NBN access with transmission services).
An ACCC consultation paper argued the when it came to dark fibre, TPG, Vocus and Superloop are the “only active larger suppliers having commercial offers,” although it noted that a “small number of other providers ... have developed niche services”.
“A key observation of the market study was that not all owners of fibre are supplying dark fibre services to the market,” the paper said. “Both Telstra and Optus own dark fibre, but Telstra noted in its submission to the market study that it only provides dark fibre for specific use cases where there is a business case to do so. The ACCC’s understanding is that Optus does not supply dark fibre.”
The ACCC’s proposed RKR is focused on the supply of dark fibre services to NBN POIs. It would require reporting from telcos that offer dark fibre services to a POI to third parties, as well as those service providers that have dark fibre connected or able to be connected to a POI but do not currently offer a service to third parties.
Data collected by the ACCC would include the number and distance of links, the NBN POI at which a link terminates, and prices charged for a link during a reporting period.
Initially the RKR would apply to Telstra, TPG (and AAPT), Nextgen, Vocus, Optus and Superloop.
The NBN wholesale aggregation services RKR — which would apply to Optus, Telstra, TPG (and AAPT), Nextgen, Vocus, Symbio and Wideband — would require the reporting of information including the names of customers of wholesale aggregation services, prices charged, which POIs customers were served at, contracted capacity as well as a range of other data (including the speed tier of NBN services supplied).
The ACCC proposals drew responses from Optus, TPG, Vocus and Telstra — none of which supported the new rules. The telcos argued that there was no case for the new RKRs to be created and that to do so would impose undue compliance costs.
“Dark Fibre is not bottleneck infrastructure,” TPG argued. “Any carrier can invest and construct their own dark fibre network should they choose to do so. There is no barrier to entry and many carriers have installed fibre on both small and more substantial scales.”
The telco said that if a company is unwilling to build its own infrastructure there is an ACCC-regulated alternative: The Domestic Transmission Capacity Service (DTCS), which involves the ACCC regulating backhaul in some parts of Australia.
Vocus took a similar position: “This market should not be looked at in isolation. There are alternative wholesale services that provide high capacity data links to NBN POIs. Different carriers seek dark fibre or alternative services for a variety of reasons, including economics, control and redundancy.”
When it came to the NBN wholesale aggregation services market, Telstra argued it was “competitive” with services “growing at a rate broadly in line with the NBN roll out”.
“This growth has occurred despite the challenges faced by NBN wholesale aggregation service providers, including nbn co’s wholesale pricing structure which is squeezing industry margins at the wholesale level to close to zero,” the telco added.
Telstra argued that the biggest risk to competition in the NBN market is NBN Co’s wholesale pricing levels, as well as a lack of wholesale price certainty and a regulatory framework that isn’t delivering “stable and predictable wholesale prices”.
“The resultant squeezing of industry margins at the retail level (and by extension, at the wholesale level) is harming competition, as evidenced by various RSPs [retail service providers] either pulling back from active marketing of NBN services, or withdrawing completely,” Telstra argued.
“This pricing complexity and volatility also makes it challenging for those wholesaling NBN services to provide certainty to access seekers,” the telco’s response to the ACCC added.
The ACCC proposals drew support from the Australian Communications Consumer Action Network (ACCAN), however.
“We recognise that collecting information imposes costs on businesses. However, the potential cost of ineffective wholesale (upstream) markets is that consumers in retail (downstream) markets have less choice and potentially pay higher prices,” the advocacy group argued.
“The ACCC’s market study highlighted the potential importance of dark fibre and NBN wholesale aggregation services to facilitate downstream competition,” ACCAN said. “However, without sufficient information to monitor these markets, the ACCC is unable to determine if the market is functioning effectively or if regulatory intervention is necessary to promote the long term interests of consumers.”