[AusNOG] Comms Day on reviews of the Telecoms Act

[Geordie Guy]

Why don't we keep the ACCC and get rid of ACMA?


On Tue, Feb 18, 2014 at 1:01 PM, Narelle <narellec at gmail.com> wrote:

> Opinion in CommsDay today comes out swinging against the ACCC and some of
> the pillars of Australia's competition regulation. "[T]he time may have
> come for the ACCC to vacate its role as the de facto comptroller and
> consigliere for the Australian telecommunications industry".
>
>
> What would this mean for ACMA? Comms Day may be reading the govt
> correctly, they may be not.
>
>
> Thoughts?
>
>
> Narelle
>
>
>
> From Comms Day today
>
>
>
> COMMENT BY GRAHAME LYNCH
>
>
>
> *Is a new 2014 Telecommunications Act in the offing?*
>
>
>
> Is the Federal government gearing up for the most far-reaching overhaul of
> telecommunications legislation
>
> and regulation in seventeen years--in effect, a new 2014 Telecommunications
> Act that replaces
>
> the 1997 act and the telecommunications sections of trade practices
> legislation?
>
>
>
> That's certainly the implication of the messaging coming out of Canberra
> over the past few days.
>
> EXHIBIT A: Parliamentary secretary Paul Fletcher told parliament last week
> "the current regulatory
>
> framework is fundamentally based on a 1990s world of relatively stable
> technologies and business
>
> models which placed great emphasis on the predominance of the fixed-line
> network--which was certainly
>
> a valid assumption at the time. Since that time, of course, there has been
> a steady accretion of
>
> layer upon layer of rules and regulations. Some of these rules and
> regulations are important for facilitating
>
> competition but others are not of such evident value in 2014. It is timely
> to ask whether the
>
> policy objectives underpinning particular regulatory measures in the
> communications sector remain
>
> valid; if they do not, the case for those regulations being retained is
> very difficult to see."
>
>
>
> EXHIBIT B: The "framing" paper for the NBN cost-benefit review released
> last Thursday night reads
>
> less like a slight calibration of the status quo and more like the type of
> paper one would release if one
>
> was contemplating a complete "re-boot" of the entire policy and
> legislative assumptions that underpin
>
> the Australian telecommunications sector. It states that "Australia is
> unusual in vesting responsibility
>
> for economic regulation of telecommunications in a generalist body whose
> responsibilities include
>
> administration of the competition laws."
>
>
>
> "Originally, the decision to transfer those powers to the ACCC was based
> on the view that telecommunications- specific provisions would merge over
> time into the national access regime established under Part IIIA of then
> Trade Practices Act. However, no such confluence has occurred nor
>
> seems likely to occur, though it may well be that some aspects of the
> current telecommunications provisions will eventually be substantially
> streamlined. In the light of those considerations, and of the
>
> broader factors determining the efficient allocation of functions in a
> regulatory system, the panel
>
> would welcome views on whether the current allocation of responsibilities
> should remain or alternatively,
>
> what alternative approach would be preferable."
>
>
>
> EXHIBIT C: The same framing paper invites a complete "re-think" on the
> assumptions underlying
>
> the NBN policy, which, of course, was the end-point of the open access
> debate and policy evolution
>
> that began in earnest as long ago as 2001 and accelerated in 2005 under
> Telstra's plea for regulatory
>
> relief so it could build an FTTN network. Among the issues on the table:
> should the NBN refrain
>
> from overbuild of privately held networks that can achieve NBN-level
> functionalities, should retail
>
> service providers be able to buy equity in NBN Co, how should
> cross-subsidies for loss making services
>
> be best provided and most significantly, "What broader structural model or
> models for the industry
>
> should the panel consider"?
>
>
>
> The corridors of power now host alternative intellectual viewpoints to the
> access seeker-driven
>
> "victim mentality" agenda that has dominated Australian telecom policy for
> a decade.
>
> The failure of the ACCC to adopt a consistent regulatory approach that
> would provide predictability
>
> and certainty for telecommunications network investors has been well
> catalogued, especially in this
>
> journal, but the regulator persists, oblivious to criticism. Now taxpayers
> are potentially exposed to upwards of tens of billions of dollars of
> liability simply so that My Little ISP Pty Ltd can theoretically
>
> play in the same league as Telstra and SingTel.
>
>
>
> From 2002 or so, the ACCC acted as if making access seekers more reliant
> on below-cost access to
>
> Telstra's network would somehow reduce Telstra's dominance, seemingly
> blind to the obvious endpoint
>
> that the investment impasse this spawned provided limited short term
> benefits to some citizens
>
> as consumers (the million or two who took a slightly cheaper
> Telstra-sourced, access-seeker resold
>
> broadband service in urban areas) and a medium to long term cost to all
> citizens as taxpayers (who are
>
> exposed to the risk of the 100% government subsidised NBN and are
> compelled to out lay tens of billions of dollars of compensation to big bad
> Telstra).
>
>
>
> On one hand we had the ACCC denying that it priced access too low, even
> when at the same time
>
> its own explanatory documents were affirming that it employed pricing
> methodologies such as "retail minus' on already price capped retail
> services precisely because they delivered the lowest price outcome.
>
>
>
> At the same time, it constantly shifted the methodology goal posts,
> repeatedly deferring costs to
>
> a future which would never arrive: a so-called "tilted annuity" designed
> to reward access seekers with
>
> short term prices well below their sustainable cost. A decade on, the
> ACCC's cost models even now
>
> only allow Telstra to recover costs at a monthly rate of between $16 (ULL
> Band 2) and $24 (ADSL
>
> Wholesale) per line when the copper network's actual replacement network
> in the form of the NBN
>
> has estimated it needed to earn $32 by as soon as next year and above $50
> within five years to meet
>
> its own (likely over optimistic in itself) business plan.
>
>
>
> This ongoing intellectual fraud persisted because of a policy environment
> where a spectacularly
>
> well-organised and articulate access seeker lobby successfully equated
> their own interests with the
>
> "public interest" and created a sense of constant crisis about the
> regulatory regime and Telstra's
>
> "dominance." Concerns over Telstra's dominance and likely behaviour under
> privatisation also led to
>
> a succession of regulations governing its service and connection levels,
> at a potential cost of a billion
>
> or more dollars relative to benefits.
>
>
>
> The fact that the vast majority of Telstra access seekers and ISPs whose
> business formation was inspired by the 1997 reforms have sold out or merged
> for collective hundreds of millions of dollars in
>
> shareholder return--nearly 20 such entities bought by iiNet
> alone--demonstrates how over-egged this
>
> sense of perpetual grievance and crisis was. Ditto, the nationalisation of
> fixed network capital investment
>
> and deal to provide tens of billions of dollars of NBN compensation to
> Telstra has correlated
>
> with a near doubling of Telstra's share price since 2010. So much for
> crimping the 600 pound gorilla.
>
> As Malcolm Turnbull memorably described it, one senses a conspiracy
> against the taxpayer.
>
>
>
> 1997 ASSUMPTIONS CHANGE: Indeed, developments over the last 17 years have
> left behind the
>
> best intentions of the 1997 Telecommunications Act. One obvious change was
> the rise of broadband,
>
> fuelled by the emergence of cheap Chinese-made DSLAMs, and the sea change
> this created in the
>
> layers where value is created over telecommunications networks--that is,
> not just through end user
>
> access charges, but through over-the-top services and serving facilities
> in data centres.
>
>
>
> Another was the rise of mobile tech to dominance and its ability to offer
> substitutes to almost every
>
> monetisable service hitherto monopolised by the fixed network. Stephen
> Conroy, his advisers, bureaucrats
>
> and industry supporters, were unfortunately so blindsided by fixed access
> seeker and then
>
> FTTH lobby rhetoric that they failed to react to these developments,
> committing ever more public
>
> policy attention and resource to the apparently vexing but increasingly
> receding priority of vertical
>
> integration and retail dominance in the fixed network access market.
>
>
>
> Now the writing is on the wall for these decade-old homilies. The new
> government appears determined
>
> to deliver on red tape reduction in a way its predecessors under Rudd,
> Gillard and Howard
>
> did not--and the vast, unwieldy pot-pourri of 20th century
> telecommunications legislation seems ripe
>
> for dismantling. One of the chief dissenters from the received wisdom over
> the past decade, Professor
>
> Henry Ergas, now sits on the panel charged with providing primary advice
> to government on what
>
> new approach it should adopt, alongside some interesting characters such
> as Alison Deans, who, as a
>
> former Ebay executive, presumably brings a nuanced view of the interplay
> between OTT, access, fixed
>
> and mobile in the telecommunications ecosystem.
>
>
>
> The new panel has already overtly signalled that the time may have come
> for the ACCC to vacate
>
> its role as the de facto comptroller and consigliere for the Australian
> telecommunications industry.
>
> Almost certainly the emphasis will be on compelling telecom operators--and
> the private sector more
>
> generally--to take on more of the risk, heavy lifting and reward in
> building and delivering next generation
>
> services. Lest this be seen as a fool's errand it should be revealed that
> Telstra CEO David Thodey
>
> and a representative of Optus' ultimate owner Temasek are meeting with
> Federal Treasurer Joe Hockey
>
> later this week to discuss how to unlock private sector capital for
> infrastructure investment. Legislative
>
> and regulatory incentives--and disincentives- will almost certainly be a
> topic for discussion.
>
>
> --
>
>
> Narelle Clark
> president at isoc-au.org.au
> narellec at gmail.com
>
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