ACCC reports
Telecommunications competitive safeguards for 2012–13
Changes in the prices paid for telecommunications services in Australia 2012–13
This publication contains two reports:
Report 1 Telecommunications competitive safeguards for 2012−13
Report 2 Changes in prices paid for telecommunications services
in Australia, 2012−13
ISBN 978 1 921973 99 4
Australian Competition and Consumer Commission
23 Marcus Clarke Street, Canberra, Australian Capital Territory, 2601
© Commonwealth of Australia 2014
This work is copyright. In addition to any use permitted under the Copyright Act 1968, all material contained within this work is provided under a Creative Commons Attribution 3.0 Australia licence, with the exception of:
· the Commonwealth Coat of Arms
· the ACCC and AER logos
· any illustration, diagram, photograph or graphic over which the Australian Competition and Consumer Commission does not hold copyright, but which may be part of or contained within this publication.
The details of the relevant licence conditions are available on the Creative Commons website, as is the full legal code for the CC BY 3.0 AU licence.
Requests and inquiries concerning reproduction and rights should be addressed to the Director, Corporate Communications, ACCC, GPOBox 3131, Canberra ACT 2601, or .
Important notice
The information in this publication is for general guidance only. It does not constitute legal or other professional advice, and should not be relied on as a statement of the law in any jurisdiction. Because it is intended only as a general guide, it may contain generalisations. You should obtain professional advice if you have any specific concern.
The ACCC has made every reasonable effort to provide current and accurate information, but it does not make any guarantees regarding the accuracy, currency or completeness of that information.
Parties who wish to re-publish or otherwise use the information in this publication must check this information for currency and accuracy prior to publication. This should be done prior to each publication edition, as ACCC guidance and relevant transitional legislation frequently change. Any queries parties have should be addressed to the Director, Corporate Communications, ACCC, GPO Box 3131, Canberra ACT 2601, or .
ACCC 02/14_814
www.accc.gov.au
Telecommunications competitive safeguards for 2012–13
Report to the Minister for Communications
List of shortened forms
2G second generation mobile communications
3G third generation mobile communications
4G fourth generation mobile communications
ABS Australian Bureau of Statistics
ACCAN Australian Communications Consumer Action Network
ACCC Australian Competition and Consumer Commission
ACL Australian Consumer Law
ACMA Australian Communications and Media Authority
AD access determination
ADSL asymmetric digital subscriber line
ALRC Australian Law Reform Commission
AMTA Australian Mobile Telecommunications Association
ASIC Australian Securities and Investments Commission
BBM Building Block Model
BCS basic carriage service
BROC binding rule of conduct
CAN customer access network
CBD central business district
CCA Competition and Consumer Act 2010 (replaced the Trade Practices Act 1974)
CPI consumer price index
CSP carriage service provider
DSL digital subscriber line
DSLAM digital subscriber line access multiplexer
DTCS domestic transmission capacity service
ESA exchange service area
EU European Union
FAD final access determination
FLSM Fixed Line Services Model
GB gigabyte
GHz gigahertz
GSM global system for mobile communications
HFC hybrid fibre coaxial
IP internet protocol
IPTV internet protocol television
ISP internet service provider
LBAS local bitstream access service
LCS local carriage service
LSS line sharing service
LTE long term evolution
Mbps megabits per second
MHz megahertz
MNO mobile network operator
MTAS mobile terminating access service
MVNO mobile virtual network operator
NBN National Broadband Network
NBNCo National Broadband Network Co Limited
OECD Organisation for Economic Cooperation and Development
OTT over-the-top
POIs points of interconnection
PSTN public switched telephone network
PSTN OA PSTN originating access
PSTN TA PSTN terminating access
RAF regulatory accounting framework
RKR record keeping rule
SAU special access undertaking
SFAA standard form of access agreement
SSU structural separation undertaking
SIOs services in operation
SMS short messaging service
TB terabyte
TCP Telecommunications Consumer Protection Code
TIO Telecommunications Industry Ombudsman
TPA Trade Practices Act 1974 (now the Competition and Consumer Act2010)
ULLS unconditioned local loop service
VHA Vodafone Hutchison Australia
VoIP voice over internet protocol
VoLTE voice over LTE
WBA Wholesale Broadband Agreement
WLR wholesale line rental
Executive Summary
Developments in the telecommunications sector
Competition is driving consumer benefits in the sector
The benefits of competition can be readily seen in Australia’s telecommunications sector. Since the industry was opened to competition we have seen:
· dramatic price reductions, with consumers paying 47percent less for fixed voice services and 52percent less for mobile services than in 1997–98, after adjusting for inflation[1]
· significant increases in investment to improve infrastructure and meet growing consumer demand
· technological changes and innovations, including the increasing use of smart phones and tablets and roll out of faster networks
· consumers and businesses enthusiastically taking up new devices and services, and
· telecommunications companies competing to win and keep customers.
The Australian Competition and Consumer Commission (ACCC) has played an important role in promoting competition during this time. In particular, we opened access to Telstra’s fixed line networks, including the unbundling of Telstra’s local loop. As a result, about 20percent of fixed line services are now provided using unbundled lines.
The industry has been in a period of long transition, and will continue to evolve as the National Broadband Network (NBN) is rolled out. While we have a regulatory role to ensure the smooth transition to the NBN, we will also continue to regulate legacy networks to promote competition and bring long-term benefits to consumers.
Market trends and developments in 2012–13
Mobile and wireless devices were more popular than ever
There were more than twice as many mobile services than landline services in use in Australia in June2013.[2] Mobile call minutes also overtook landline call minutes for the second consecutive year.
Wireless broadband was the most popular type of internet connection, accounting for 50percent of all internet connections in June 2013.[3]
While mobile and wireless services were very popular, for many consumers these services remained complementary to landline services, particularly in the case of broadband.
Consumer demand for data continued to increase dramatically
Consumers downloaded 59percent more data over the internet than last year. Some 96percent of this data was downloaded via a fixed line internet connection.[4]
Consumers also downloaded 97percent more data via mobile handsets than last year, although this only made up a small proportion of all data downloaded.[5]
International mobile roaming charges remained an area of concern
International mobile roaming charges remain high and continue to be a source of concern for consumers and governments. This has attracted recent attention in Australia and internationally.
State of competition in telecommunications markets in 2012–13
Competition in telecommunications markets has delivered new infrastructure, better networks, and improved service quality. While there are encouraging signs that competition in telecommunications markets is continuing to deliver benefits, regulation remains important to ensure that competition in the sector meets the long-term interests of the community.
Price competition was less vigorous, but other factors became more important
Retail price competition was generally less vigorous this year than it has been in the past, particularly in the mobile sector. Mobile operators adjusted their pricing by keeping retail price points at about the same level but changing the included value components of some plans. This can make it difficult for consumers to assess whether they are getting the same value or whether they would be better off with a different plan or service provider.
Prices did fall for fixed line services, however, the decrease in prices was less than in the previous year. The largest change was made to international calls from a landline telephone and calls to mobiles from a landline telephone, which fell by 21percent and 12percent respectively.[6] The reduction in the price of calls to mobiles from a landline telephone was consistent with our 2011 decision on the domestic mobile terminating access service (MTAS) which saw a fall in the wholesale access price.
Telecommunications companies are competing to win customers on the basis of other non‑price factors, such as network quality and customer service. This is encouraging and we welcome industry initiatives to improve service, particularly after many years of high levels of consumer complaints about these issues.
Telecommunications companies compete for market share
Telstra remained the largest provider of telecommunications services in Australia, although other providers in the market are competing strongly for market share.
Telstra remained the largest provider of landline services, but other companies are offering consumers a choice of services, at different price points and with different attributes. There has been some consolidation in the fixed broadband market which is now dominated by five major players following the M2Group’s acquisition of Dodo and Eftel. Of these companies, Telstra holds the largest market share of 42percent, followed by Optus with 15 per cent and iiNet with 14percent.
Telstra increased its market share in the mobile and wireless markets in 2012–13. This is likely due to its ability to differentiate itself based on a number of factors such as network performance and being the first 4G operator in Australia. Mobile resellers also grew their market share and continued to offer consumers attractive deals on 2G, 3G and 4G networks.
Strong investment in telecommunications infrastructure
The NBN is the most significant fixed line infrastructure development in Australia.
Mobile network operators all invested significantly in their 4G and 3G networks during the year to meet consumer demand for mobile and wireless data services. Telstra, Optus and TPG also purchased additional spectrum in the digital dividend auction which they are likely to use to boost their mobile networks.
Telecommunications complaints fell significantly
Consumers made fewer complaints about their telecommunications services in 2012–13 than in recent years. Complaints to the ACCC about telecommunications fell 30percent during the year and complaints to the Telecommunications Industry Ombudsman (TIO) fell to the lowest level in five years.[7]
It appears that new regulations, some ACCC enforcement action and competition in the industry are encouraging operators to focus on issues such as service quality and customer satisfaction. This is particularly pleasing given the concerns expressed about the very high level of complaints in this sector in recent years.
Fixed broadband services were relatively expensive in Australia
Australian consumers tend to pay more than most other countries for fixed broadband, possibly due to our geography and a lack of alternative providers of wholesale fixed line services. Alternatively, wireless broadband appears to be relatively less expensive in Australia compared to some other countries.
ACCC activities in 2012–13
Our activities in the telecommunications market
In this dynamic environment, it is important to make sure that there are effective safeguards in place to protect against the exercise of market power, to promote competition and to deliver benefits to consumers.
We have an important role in promoting competition in the telecommunications sector. Some of our key activities in the telecommunications sector include:
1. Protecting competition and consumers
2. Engaging with industry and consumers
3. Promoting a competitive industry structure
4. Regulating access to network infrastructure
Protecting competition and consumers
During the year we conducted 20 major investigations into potential contraventions of competition and consumer laws.
We took action against several telecommunications providers for misleading representations, misleading advertising, unfair contract terms and acting unconscionably. These cases are important as these types of conduct may cause harm to consumers and to competitors who are doing the right thing. Some examples include action against:
· EDirect Pty Ltd for engaging in telemarketing of mobile services to customers from remote and regional communities who had no mobile network coverage where they live
· ByteCard Pty Ltd for including unfair contract terms in its standard form consumer contract, and
· TPG Internet Pty Ltd for misleading advertisements about its unlimited ADSL2+ product.
Engaging with industry and consumers
We worked closely with industry, government and a range of consumer groups to identify and respond to potential issues in the sector. This year we:
· engaged with key stakeholders to identify and address potential issues regarding the transition to the NBN. This included working closely with Communications Alliance, Australian Communications Consumer Action Network (ACCAN) and the TIO
· published materials about selecting mobile plans and the services we regulate to strengthen consumer awareness and improve information available for consumers
· worked with 50 other consumer protection agencies to identify smart phone and tablet apps that may mislead young children into making unauthorised in-app purchases
· worked with the Australian Securities and Investments Commission (ASIC) and some other agencies to develop electronic resources to help students navigate the costs of mobile phones, and
· worked with the Australian and New Zealand governments to address the high costs of mobile roaming and improve outcomes for consumers.
Promoting a competitive industry structure
The structural separation of Telstra is a fundamental change to the structure of the telecommunications industry.
We have an important role in ensuring that Telstra is complying with its structural separation undertaking (SSU) and migration plan. This includes:
· responding to reported breaches of the SSU and possible breaches of Telstra’s overarching equivalence commitment
· approving variations to the SSU and migration plan
· reporting to the Minister on Telstra’s compliance with the SSU, and
· establishing a wholesale customer forum to engage with industry and resolve potential issues arising under the SSU.
Some tangible benefits were realised in relation to the interim equivalence and transparency measures that Telstra committed to in its SSU. This includes improvements in Telstra’s security practices relating to wholesale customer information and its equivalent handling of basic telephone faults.
Regulating access to telecommunications network infrastructure
We regulate access to a number of wholesale telecommunications services to promote competition in the industry and to benefit the long-term interests of consumers. Access regulation reduces the barriers for competing operators to enter and compete in downstream markets. It also encourages existing and new operators to invest in new infrastructure.