ACCC levels playing field for mobile regulation

The Australian Competition and Consumer Commission today announced its draft decision which aims to put GSM* and CDMA** mobile phone services on an equal regulatory footing by proposing to vary the service declaration for GSM services to include CDMA services.

"This decision is likely to improve competitive forces on the wholesale CDMA termination service and bring benefits to consumers, such as lower fixed-to-mobile call prices", ACCC Chairman, Professor Allan Fels, said. "It will likely continue the ACCC's light-handed approach to pricing of the wholesale GSM termination service".

The decision comes as the ACCC takes a closer look at the mobile market in the light of recent price increases by some carriers.

GSM and CDMA are the principal technologies utilised by carriers in Australia to provide mobile services to consumers, including SMS messaging services. At present only GSM mobile services are regulated, as CDMA networks were not in use when the present regulatory regime was introduced in 1997. The ACCC's draft decision will remedy this discrepancy.

The draft decision assists in the development of a more level playing field for carriers and helps to removes potential inefficiencies that could result if GSM were the only mobile services to be regulated.

"Bringing CDMA services under regulation will also help to ensure competition continues to improve in the mobile services market", Professor Fels said.

The ACCC will examine regulation of the mobile services market as a part of its two-year review of the pricing of wholesale GSM termination services. The review will finish in 2003. Under the draft decision this would include CDMA services.

The ACCC has released a Draft Report detailing its decision and seeks comments from interested parties by Friday 18 January 2002. The ACCC will finalise the report after considering any submissions made to the draft report.

Background

Part XIC of the Trade Practices Act 1974 establishes 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, or vary/revoke an existing declared 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. The ACCC can revoke or vary a declaration where it is no longer satisfied that the existing declaration is in the long-term interests of end-users.

In assessing whether declaration, revocation or variation to an existing 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.
  

Technical information

*GSM (Global System for Mobile) is also a digital wireless telephony transmission technique. It was the first European digital standard and established cellular compatibility throughout Europe. GSM operates at the 900 and 1800 MHz band.

** CDMA is an acronym for Code Division Multiple Access, which is a digital wireless telephony transmission technique. CDMA allows multiple frequencies to be used simultaneously (a technique called spread spectrum) and operates in the 800 MHz band.