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Summary

The recent draft statement of the Australian Competition and Consumer Commission (ACCC) on the Superfast Broadband Access Service (SBAS) is still pending approval. However, it shows the regulator’s intention to make the service subject to ex-ante regulation and to ensure that broadband services of 25Mbps or higher are sufficiently competitive. The regulator also aims to close a loophole that has allowed other operators to deploy superfast broadband infrastructure in competition with the National Broadband Network (NBN), and act as a retail provider, without being subject to wholesale access obligations.

The level-playing field provisions for the NBN have proved ineffective

If the ACCC’s draft is approved in its current form it will be the first time that such a service has been declared. However, other wholesale broadband services are already subject to ex-ante regulation in Australia, including those falling under the scope of the Local Bitstream Access Service (LBAS) declaration or under the NBN level-playing field provisions in the Telecommunications Act. The LBAS, passed in 2012, requires operators of fixed superfast broadband networks built or extended by more than 1km after January 1, 2011 to provide access to a layer-2, 25/5Mbps service upon request. The level-playing field provisions forbid any network operator to provide broadband at the retail level unless the network was built or upgraded before January 1, 2011.

With the new draft the ACCC is seeking to improve regulatory consistency and close gaps in the current regulatory framework. It is likely that the rationale for the regulator’s stance is the ineffectiveness of the level-playing field provisions. In particular, the case of TPG in 2014 highlighted the need to review and potentially readjust the regulatory framework. TPG planned to connect large apartment buildings in metropolitan areas to its existing fiber networks and to use fiber-to-the-basement technology to supply high-speed broadband services. In September 2014 the ACCC found that TPG’s plan was not in breach of the level-playing field provisions because the network existed before January 2011 and was not being extended further than 1km.

Strikingly, the ACCC’s focus was initially on VDSL2 services only, but its scope expanded when the regulator found that all superfast fixed broadband networks show characteristics of natural monopolies.

It is now quite likely that the ACCC’s final statement will rule that the SBAS will be subject to ex-ante regulation. Despite some inevitable differences, most respondents to the first consultation have argued in favor of declaring the service. However, there are still doubts as to whether small operators should be excluded from the scope of the remedies due to the likely associated costs; the ACCC was still seeking advice in that area at the time of writing.

Appendix

Further reading

Australia (Country Regulation Overview), TE009-001063 (March 2014)

Author

Luca Schiavoni, Senior Analyst, Regulation

luca.schiavoni@ovum.com

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