The Australian Competition and Consumer Commission has today released a report of its draft decision to continue regulating the termination of calls on mobile phone networks. It is also proposing to regulate the termination of SMS messages for the first time. 

The ACCC is required to review the scope of its regulation of the mobile terminating access service (MTAS) before June 2014. The last review was conducted in 2009.

“The mobiles sector has changed considerably since the last MTAS declaration inquiry in 2009,” ACCC Chairman Rod Sims said.

“Australians use mobile phones more than ever to make calls, send SMS and to access mobile data.  Mobile network operators have invested considerably to improve their networks and increase capacity to meet consumer demand.”    

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. The ACCC has regulated this service since 1997 to ensure anyone can call a person on a mobile phone.

“Regulating this service has promoted competition and led to lower prices and more choice for consumers,” Mr Sims said.

“The ACCC considers that extending the regulation of mobile terminating services for another five years will promote competition.”

The ACCC 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 that they control the connection of calls. However, unlike the regulated termination 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,” Mr 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. Our preliminary view is that regulating SMS termination will address the use of monopoly power and promote competition in the mobile sector. It should also result in lower costs to consumers.”

The full report and further information on the MTAS declaration inquiry is available on the ACCC’s website.

The ACCC expects to release a discussion paper on pricing issues in the second quarter of 2014.

The ACCC has released its report for public consultation and will be accepting submission until 14 February 2013.