ACCC to monitor the provision of domestic inter-carrier roaming services

Australian mobile carriers will be required to provide the Australian Competition and Consumer Commission with details of the terms and conditions they charge for domestic inter-carrier roaming (domestic roaming) services on mobile telephone networks, under a draft decision issued by the ACCC today.

Domestic roaming is a wholesale service sold by one mobile network carrier to another. Mobile carriers can use this service to enable their subscribers to make and receive mobile phone calls in areas where they do not have network coverage by using (or 'roaming' on to) another carrier's network.

The decision to monitor the terms and conditions upon which domestic roaming services are provided follows a draft decision by the ACCC not to declare a domestic roaming service at this point in time.

The draft decision follows an extensive inquiry by the ACCC, begun last year as part of its wide-ranging Mobile Services Review.

"The aim of the ACCC's review of mobile phone services is to determine what regulation is appropriate in order to promote the long-term interests of end-users of telecommunications services", an ACCC Commissioner, Mr Ed Willett, said today.

"The ACCC's inquiry found that roaming has a number of benefits", Mr Willett said.

"These include allowing smaller network operators to expand the areas in which they can compete to provide mobile services beyond those covered by their own network and improving the efficient use of and investment in mobile phone networks by deterring inefficient duplication of mobile networks in areas where it is not economic".

"It is also an important service for new entrants to mobile telecommunications markets, as it enables them to provide services to their consumers whilst still rolling-out their network".

"However, the ACCC is not convinced that these benefits from domestic roaming won’t be achieved in the absence of declaration of this service at this point in time".

"Information gathered during the course of this inquiry indicates mobile operators have been able to acquire domestic roaming services, where they have sought to do so, in the absence of formal regulation of the service in the past".

While the ACCC's draft decision is not to declare a domestic roaming service, it is concerned by the potential market power providers of domestic roaming services have.

"The ACCC believes the number of potential suppliers of domestic roaming services is low – particularly with regard to CDMA mobile networks, and in certain geographic areas of the country", Mr Willett said.

"This is likely to continue to be the case following the deployment of third generation mobile networks. This has the potential to impede the provision of domestic roaming on reasonable terms and conditions in the future".

"The ACCC is also aware that some smaller carriers have had difficulties in the past negotiating commercial terms and conditions of access to domestic roaming services".

"The ACCC has therefore reached a draft view that while it is not appropriate to declare a domestic roaming service at this point in time, it will formally monitor the provision of the service in the future".

"Such monitoring will be in the form of a record keeping rule that requires mobile operators to provide the ACCC with details of the terms and conditions of agreements entered into with parties to provide domestic roaming services".

"Were the ACCC to become aware of refusals to supply roaming services on a commercial basis and on reasonable terms, the ACCC may review its non-declaration decision", Mr Willett said.

"Such refusals may also be investigated under the anti-competitive conduct provisions of the Trade Practices Act".

The ACCC is seeking submissions on its draft decision from interested parties by close of business, on Friday 29 October 2004.

"The ACCC encourages all interested parties to take advantage of this opportunity and will not reach its final decision until it has fully considered all of these submissions", Mr Willett said.

Following consideration of all submissions, the ACCC expects to issue its final decision in late-November 2004.

Background

In March 2003, the ACCC announced it would conduct a wide-ranging review of the regulation of the mobile services industry.

One aspect of this inquiry concerns whether the ACCC should declare a domestic inter-carrier roaming service.

The domestic inter-carrier roaming service

Mobile domestic inter carrier roaming is a service which enables mobile subscribers to use their mobile phones to make and receive calls by means of another network in Australia (the "visited" network) when outside the coverage of the network to which they subscribe (the "home" network). The service is a wholesale service supplied by the visited network operator to the home network operator, which is then re supplied by the home network operator to its subscribers.

At present, domestic inter-carrier roaming is provided by some operators of both code division multiple access (CDMA) and global system for mobiles (GSM) mobile networks. CDMA and GSM are two alternative network technologies used to provide second generation digital mobile services. Whilst roaming is possible between networks of the same second generation mobile technology, subscribers of CDMA services cannot roam onto GSM networks (and vice-versa).

What is declaration?

Under the Trade Practices Act 1974, declaration of a service creates a requirement for carriers supplying the service (access providers) to provide the service upon request to other service providers (access seekers). The access provider must take all reasonable steps to ensure the technical and operational quality of the service is equivalent to that which the access provider provides itself.

Thus declaration ensures access seekers have access to the inputs they need to supply competitive communications services to consumers. Access must be provided in accordance with the standard access obligations in the Act. Further terms and conditions can be agreed by commercial agreement. If agreement cannot be reached on the terms of access, the ACCC can arbitrate the dispute.

The ACCC's record keeping rule powers

Under s. 151BU of the Trade Practices Act 1974, the ACCC has the power to make a record keeping rule by written instrument and require that carriers and carriage service providers comply with it. The rules may specify what records are kept, how reports are prepared and when these reports are provided to the ACCC. The ACCC cannot require the keeping of records unless they contain information relevant to its responsibilities. These responsibilities include the operation of Parts XIB and XIC of the Act.

Public consultation on this issue

On 24 April 2003, the ACCC issued a discussion paper to inform its review of mobile services. It received eight submissions from interested parties relating to the domestic roaming service. The ACCC also held two public forums in Melbourne and Sydney in August and September 2003 as part of the broader Mobile Services Review, and conducted further market inquiries in relation to this matter during 2004.

As part of its Mobile Services Review, the ACCC has already released final decisions in relation to the Mobile Terminating Access Service and the Mobile Originating Access Service on 30 June 2004.