The Australian Competition and Consumer Commission (ACCC) said it will continue to regulate the termination of calls on mobile phone networks, and has also proposed to also regulate the termination of SMS messages for the first time.
This draft decision is part of the ACCC's required review of the scope of its regulation of the mobile termination access service (MTAS), which is due before June 2014. The last review was conducted in 2009.
Mobile termination services allow mobile network operators to connect calls from other mobile and fixed line networks. The network that originates the call pays the network receiving the call a termination charge. Generally, the originating network will recover the costs of termination through its retail prices.
According to ACCC chairman, Rod Sims, "Regulating this service has promoted competition and led to lower prices and more choices for consumers," and extending it for another five years will promote further competition.
The ACCC claims it received information during the inquiry that suggests that regulation should be extended to SMS termination services. Mobile network operators control the delivery of SMS messages in the same way calls are controlled. However, unlike the charges for mobile calls, the wholesale charge for sending SMS between networks has remained unchanged for a number of years.
"The ACCC is concerned that mobile network operators may be exercising monopoly power over access to their networks to keep wholesale SMS rates significantly above costs," Sims said.
"Although some of the higher price retail plans offer unlimited SMS, the wholesale charge for SMS termination is passed on in other retail costs."
Sims claims regulating SMS termination will address the use of monopoly power and promote competition in the mobile sector, while resulting in lower costs to consumers.
Fixed line regulation
The ACCC's draft report also reviews the scope of its regulation of transmission and fixed line services; it proposes to largely maintain the existing regulation of wholesale services supplied using Telstra's copper network, other fixed line infrastructure, and transmission routes for another five years until 2019.
The existing declaration for transmission services (the Domestic Transmission Capacity Service or DTCS) expires in March 2014 and the declarations for the six fixed lined services expire in July 2014.
"Regulating these services has promoted competition over bottleneck infrastructure and contributed to lower prices and greater choice for Australian consumers," Sims said.
To ensure regulation is only applied where necessary, the ACCC is proposing adjustments to the scope of the regulation of the DTCS and fixed line services.
For DTCS, ACCC is looking to adopt a more comprehensive methodology for assessing competition on particular routes. It has applied these new criteria to determine which routes should be regulated, and as a result, an addition 112 metropolitan exchange service areas and eight additional regional routes have been removed.
For fixed line services, it is proposing to clarify that resale voice services provided using the NBN are not regulated. It is also looking to regulate resale voice services supplied in CBD areas where infrastructure-based competition has proven not to be sufficiently effective.