Regulatory Institutions The Telecommunications Regulatory Regime in Australia

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Regulatory Institutions The Telecommunications
Regulatory Regime in Australia
Telecommunications Policy Review Panel Policy
forum - 26 October 2005 Warwick Davis Director /
Economic Adviser Telecommunications Group, ACCC
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Outline

• Australian model of telecommunications regulation
• Focus on economic regulation
• Intent of regulatory structure
• Legislation
• Institutions
• Balance of powers
• Comments

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Intent / Object

• 1993 Hilmer Review of Competition Policy in
  Australia
• 1997 reforms
• Industry-specific telecommunications regulator
  split
• Economic regulation to ACCC
• Single regulator / competition authority
• Single piece of competition legislation
• Technical regulation to specialist body
• now Australian Communications and Media Authority
  ACMA
• Includes spectrum, equipment regulation

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Intent / Object (2)

• A single regulator / competition authority
  approach
• Promotes alignment of economic regulation and
  competition law
• Promotes consistency of decisions between
  regulated industries
• Allows greater certainty and fairness in
  universal application of competition law
• Means less chance of regulatory capture
• Means less duplication of roles
• Although
• Specific telecommunications laws retained within
  context of Trade Practices Act 1974

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Legislative framework
Trade Practices Act 1974
Economy wide powers National facilities access
regime (Part IIIA) Anti-competitive conduct
provisions (Part IV)
Telecommunications specific powers Telecommunica
tions specific access regime (Part
XIC) Telecommunications specific
anti-competitive conduct provisions (Part XIB)
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Legislative framework

• ACCC has both
• Regulatory and competition law functions
• Sector specific and economy-wide regulatory
  functions
• Internal structure reflects balance

ACCC also has enforces sector specific
competition laws
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Sector-specific laws

• Recognises telecommunications industry is on a
  reform path
• Developing competition from monopoly / duopoly
• Special competition law powers (XIB)
• Telecommunications networks are two way
• Access regulation that ensures interconnection
  between networks (XIC)

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Part XIC Telecommunications Access Regime

• Ex ante powers
• The ACCC can declare wholesale or access
  services
• Creates obligation to supply
• Declare Negotiate Arbitrate (light handed)
• Pricing principles are established to apply to
  those services
• Undertakings can also be lodged by access
  provider
• The test for declaration Long-term interests
  of end users?
• Promote competition?
• Promote any-to-any connectivity?
• Promote efficiency?

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Part XIB Competition Rule

• Ex post power
• Can issue competition notices against
  anti-competitive conduct
• Anti-competitive conduct includes all the
  standard anti-competitive practices under Part IV
  of the Act
• price fixing, abuse of market power
• But
• Different threshold to show anti-competitive
  behaviour than Part IV
• possible to reverse onus of proof
• Fines available through court action

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Part XIB

• Two ancillary powers which can assist ex post
  enforcement action
• To notify tariff changes (tariff filing)
• To keep certain records (e.g. accounting
  separation)
• (Can also be used to aid XIC functions)

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Appeals

• On certain Part XIC matters specialist
  Australian Competition Tribunal
• On Part XIB matters through the Federal courts

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Related Government Powers

• Tend to be related to social objectives
• Retail price controls
• Broad based price cap still applies to incumbent,
  Telstra
• Determination of Universal Service Obligation
  funding
• Ministerial determinations provide for discretion
• Power not used
• But pressure being appliedunbundled local loops
• Tensions with ownership

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Technical regulation

• Australian Communication and Media Authority
  (ACMA)
• Telecommunications Act, Radiocommunications Act,
  Broadcasting Act
• Carrier licences
• Universal service
• Customer guarantees
• Technical rules and standards
• Spectrum management
• Consultation and negotiation between ACMA / ACCC
• Chairperson associate member of ACCC
• ACCC can direct on certain competition-related
  matters

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The state of telecommunications

• Significant progress from 1997
• More competitors
• Fast rate of price decline
• New investment
• Butis market structure conducive to sustainable,
  facilities-based competition?
• Highly integrated incumbent with single
  ubiquitous network
• Easy re-sale gains are over, frustration of
  access
• Can incentives of access provider be aligned with
  access seekers?