ACCC begins monitoring internet interconnection

The Australian Competition and Consumer Commission today issued a record keeping rule (RKR) and a disclosure direction to 20 leading ISPs as part of a three year monitoring regime of the internet industry.

The monitoring program is aimed at identifying how interconnection of internet networks works in practice, and what effects that has on the markets that rely on interconnection.

Internet interconnection allows customers – business, residential or others – that are connected to one internet network to send and receive emails, access websites and exchange information with users connected to other internet networks. Internet interconnection also enables business and other consumers to make the content they store on the internet accessible to other users.

The ACCC's RKR follows its Final Report on whether to declare an internet interconnection service, which found that a case has not been made for regulation at this stage, but that there are sufficient concerns to warrant the implementation of a rigorous but carefully targeted monitoring program.

The details of the monitoring regime have been developed after taking into account industry concerns about the burden of compliance with such a program. The declaration inquiry revealed that the Australian internet industry is characterised by poor record keeping.

The Regulatory Impact Statement, which accompanies the rules, notes that "ISPs do not have formal contracts, do not know their traffic flows, and have great difficulty in specifying their revenues and costs".

"The RKR will give the ACCC a greater understanding of the industry's competitive dynamics", an ACCC Commissioner, Mr Ed Willett said today.

The ACCC will review the operation of the monitoring program after it has received data for the first 12 months.

Copies of the regulatory impact statement, record keeping rule and disclosure direction will be available on the ACCC's website.

Background

The access regulations of the Trade Practices Act 1974 establish a process whereby providers of telecommunications services can obtain access to particular (input) services. There is no general right of access to such services. Rather, the ACCC must first declare (that is, decide to regulate) the service.

The ACCC can declare a service on the recommendation of industry or after the ACCC undertakes a public inquiry process and decides the declaration will promote the long-term interests of end-users of telecommunications services.

In assessing whether declaration will promote the long-term interests of end-users, the ACCC must have regard to the objectives of:

• promoting competition in telecommunications markets;
• achieving any-to-any connectivity (that is, ensuring end-users of different networks can communicate) and
• encouraging the economically efficient use of, and investment in, infrastructure.

The ACCC sought the views of industry to determine whether declaration is the most appropriate vehicle to address concerns. As a result, the ACCC's final report concludes the following:

• while interconnection is an essential feature of providing internet services to consumers, there does not appear to be a bottleneck associated with the supply of such services.
• it does not have sufficient information at this time to decide whether or not declaration of an internet interconnection service would be in the long-term interests of end-users.
• it will monitor the industry to gain the requisite amount of information to allow it to act quickly, if required.
  

One important tool in fulfilling the ACCC's central functions is the power to establish record keeping rules by written instrument and require that carriers and carriage service providers comply with these rules. This power is provided under Section 151BU of the Trade Practices Act 1974.