Telecommunications Regulatory Update - May and June 2017
The Australian Competition and Consumer Commission (ACCC) releases quarterly report on NBN wholesale market
The ACCC has released its fifth quarterly National Broadband Network 'Wholesale Market Indicators Report' (Report). Key points from the Report:
- The most popular speed tier on the NBN remains 25/5 Mbps.
- NBN Co was supplying a total of 2,071,123 broadband wholesale access services, an increase of 365,853 since the last reporting period.
- The number of Hybrid Fibre Coaxial services in operation were 63,475 (up from the 14,551 reported in the December quarter).
- Demand for aggregate network capacity (Connectivity Virtual Circuit) continues to increase with NBN Co contracted to supply 2,149 gigabits per second, up 20 per cent from 1,785 gigabits per second in December 2016.
ACCC Chairman Rod Sims commented that “The NBN rollout to date has largely been in regional areas. Competitors to Telstra are supplying 46% of services in the regions compared with traditional market shares for broadband services where Telstra often had well over 60% market share.”
A copy of the Report is available here.
The ACCC announces that it will not declare domestic mobile roaming
The ACCC has released the Domestic Mobile Roaming Declaration Inquiry Draft Decision, which proposes to refrain from declaring a wholesale domestic mobile roaming service.
ACCC Chairman Rod Sims stated that the decision was based on "insufficient evidence that declaration will improve the current state of competition overall". The ACCC’s Draft Decision comments that declaration in regional, rural and remote areas may not reduce Telstra’s retail mobile prices to a significant extent and could well result in "overall higher prices if other service providers raise their retail prices to reflect the cost of roaming access prices".
The decision to forbid other telecommunications providers from using Telstra's roaming facilities means only Telstra can provide customers in some areas with coverage. Declaration of roaming services would have opened up access to Telstra infrastructure, allowing telecommunications providers to offer services in areas not covered by their own networks. A number of industry players, including Vodafone and other telecommunication service providers, criticised the Draft Decision, describing it as stifling increased coverage, competition and choice. Since making the declaration, the ACCC has been taken to the Federal Court by Vodafone Hutchinson Australia (VHA), with VHA filing judicial review proceedings, asking the Federal Court to
review the ACCC’s inquiry process “on behalf of all Australian mobile customers”.
The ACCC flagged a number of alternative regulatory and policy measures it suggests could help improve coverage and competition in regional areas, such as increased transparency around network quality and coverage, a re-examination of mobile co-location arrangements, and a stronger consideration of competition issues in spectrum regulation and more use of NBN assets for mobile.
A copy of the Draft Decision is available here
Government announces major reforms for Australian broadcasting
The Australian Government announced a package of broadcasting reforms, claiming that the reforms will improve the sustainability of Australia’s free-to-air broadcasting sector, assist in the creation of Australian content and modernise broadcasting and content regulation. The package also includes further restrictions on gambling advertising. The Government introduced the Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017 (the Bill) as part of planned reforms. The reform measures include:
- repealing the '75 per cent audience reach rule' and the '2 out of 3 cross-media control rule;
- amending and introducing some additional local programming obligations for regional commercial television broadcasting licensees, where, as a result of a change in control, their licences become part of a group of commercial television licences whose combined licence area populations exceed 75 per cent of the Australian population;
- amendments to the anti-siphoning scheme under the BSA and the anti-siphoning notice;
- permanently abolishing annual television and radio licence fees, and datacasting charges payable by commercial broadcasters;
- funding to Foxtel for the broadcasting of women’s and niche sports;
- removing apparatus taxes payable by commercial broadcasters;
- establishing tax collection and assessment arrangements for the new interim transmitter licence tax and establishing a statutory review of new tax arrangements in 2021 consistent with the broader review of spectrum pricing underway; and
- establishing a transitional support payment scheme for 19 commercial broadcasters to ensure that there is no commercial broadcaster that will be worse-off during the first five years as a result of the transition from a revenue-based licence fee and charge arrangement to new interim transmitter licence tax arrangements.
Telecommunications Industry Ombudsman reports a significant increase in NBN-related complaints
The Telecommunications Industry Ombudsman (TIO) has reported that complaints about services delivered over the NBN have risen for the 6 months to the end of 2016 compared to same period in 2015. Complaints about services delivered over the National Broadband Network rose 6.8% to the end of December 2016 compared to the preceding six month period. For services delivered over the NBN, 4,309 complaints were related to Internet services and 3,203 complaints related to landline services.
The TIO’s six monthly update for the period between 1 July and 31 December 2016 shows that, in total, residential consumers and small businesses made 65,970 complaints about their landline, mobile or Internet services. The report also reveals that there were complaints recorded against 324 phone and Internet providers over the six months.
However, the TIO observed that the rate of increase in these complaints was slower than the rate of new premises connected to the National Broadband Network.
Government announces reforms for Australian spectrum management framework
On 18 May, the Australian Government released a consultation package on reforms to Australia’s spectrum management framework. The consultation package includes an Exposure Draft of the Radiocommunications Bill and related consultation papers including broadcasting spectrum and transitional arrangements. The Government also released consultation papers on government spectrum holdings and spectrum pricing.
The proposed reforms follow the recommendations of the Government’s 2015 Spectrum Review to:
- replace the current legislative arrangements with new legislation;
- integrate the management of public sector and broadcasting spectrum; and
- review spectrum pricing.
The consultation package was developed in consultation with the Australian Communications and Media Authority (ACMA) which has prepared supplementary material to assist stakeholders in better understanding the Exposure Draft.
A copy of the Exposure Draft of the Radiocommunications Bill is available here.
Copies of the ACMA supplementary material are available here.
Government and Australia Post to create online identification system
Australia Post will partner with the government's Digital Transformation Agency (DTA) to create an online identification system for accessing the government's digital services.
The partnership will see Australia Post integrate its own identity technology into the government's digital identity framework. It will focus on assisting government agencies to develop how they provide access to services online and in person. Current identification processing regimes are often time consuming and expensive — Australian Post CEO Ahmed Fahour noted that identification processes cost the Australian economy up to $11 billion annually.
The Australia Post digital ID technology will be integrated into the DTA's existing GovPass project, which is now in beta testing. GovPass is intended to give the public a greater number of options for proving who they are.
ACMA review final recommendations released
The final report of the Department of Communications and the Arts’ two-year long review of the ACMA was recently released. The government's response to the final report has also been released.
The review found the ACMA has generally performed its regulatory role efficiently, and well, over the last ten years. However, the review also found that reform is needed to ensure the ACMA can respond effectively to the challenges of the future communications environment. Key recommendations of the review seek to enhance the ACMA’s stakeholder engagement, decision-making, governance and accountability. The Government supports or supports-in-principle all 27 of the recommendations of the review.
Key recommendations for reform of the ACMA include:
- Clarifying the remit of the regulator to set the boundaries of its regulatory responsibility and oversight.
- Changes to the functions of the regulator.
- Clearer formal advice from the Government to the ACMA on its expectations, within the boundaries of its statutory independence, and reporting by the ACMA on its delivery against these.
- New governance arrangements involving a 'commission' model of full-time, specialist members supported by associate members and sub-boards.
- Embedding in its establishing legislation a series of regulator principles to guide performance.
A copy of the final report is available here.
Government releases Productivity Commission report into the Universal Service Obligation
The Australian Government recently tabled the Productivity Commission's (PC's) report into the telecommunications Universal Service Obligation (USO). The USO is a consumer safeguard that ensures Australians have access to voice-only standard telephone services and payphones. These safeguards were established in an era before the widespread availability of mobile and broadband services. The current 20-year USO agreement costs almost $300 million annually, which is largely funded by the Commonwealth and telecommunication companies. Under the USO agreement, Telstra receives these allocated USO funds to ensure the provision of landlines and basic telecommunications services.
The PC report determined that the USO is "anachronistic and costly" and should be "replaced by a new framework to reflect changing policy, market and technological realities". The report also found that the USO arrangements suffer from a "lack of transparency and accountability" which "makes the continuation of current arrangement difficult to justify". The PC report states that the National Broadband Network and mobile networks will meet the connectivity needs of Australians, and has recommended that the USO be wound up by 2020.
The Government has established a USO taskforce, within the Department of Communications and the Arts, to give consideration to the PC's report.
A copy of the report is available here.
Government introduces 'Telecommunication Reform Package' into parliament
The Australian Government introduced the Telecommunications Legislation Amendment (Competition and Consumer) Bill 2017 (the Bill), together with the Telecommunications (Regional Broadband Scheme) Charge Bill 2017 (the Charge Bill). These Bills are the legislative components of the Government’s response to the independent cost-benefit analysis and review of regulatory arrangements for the National Broadband Network. The Government’s response, ‘Telecommunications Regulatory and Structural Reform’, was released on 11 December 2014.
The Bill introduces a levy of just over $7 on NBN and competing fixed-line infrastructure providers to fund non-commercial NBN satellite and wireless services. Carriers that provide fixed-line fast broadband would pay NBN Co $7.10 per connection they provide to customers. This levy is intended to defray the net cost of $9.8 billion that the NBN Co's fixed wireless and satellite networks will incur over 30 years.
The Charge Bill would set up NBN as the default ‘Statutory Infrastructure Provider’ for all of Australia, ensuring all premises would be guaranteed an infrastructure connection and ensuring all RSPs would have access to wholesale services on that infrastructure. The Charge Bill would also provide relief to NBN competitors from anti-cherry picking rules, in particular giving the ACCC leeway to relax structural separation requirements on carriers with less than a certain number of residential customers.
Planning for 5G, ACMA consults industry on the future of the 3.6 GHz band
ACMA has released a consultation package seeking industry comment and input on the future of the 3575-3700 MHz band (the 3.6 GHz band), which it is promoting as the pioneer band for 5G mobile broadband.
The consultation package identifies a range of possible options for the 3.6 GHz band and sets out the ACMA’s currently preferred option to make spectrum available in metropolitan and regional areas for new services. Under the ACMA's preferred option, incumbent satellite and regional fixed wireless operators would make way for future 5G mobile broadband services.
Release of the consultation papers follows the ACMA’s 2016 release of a discussion paper — 'Future use of the 1.5 GHz and 3.6 GHz bands' — which sought industry feedback on the ACMA’s medium and long-term planning approaches to address rising demand for mobile broadband services in the 1.5 and 3.6 GHz bands. The ACMA has now decided that consideration of the 3.6 GHz band should be prioritised over the 1.5 GHz band.
A copy of the consultation package is available here.