Our priorities in the telecommunications sector during this crisis

Speakers: 
Mr Rod Sims, Chair
Conference: 
CommsDay Summit 2020
6 April 2020

ACCC Chair Rod Sims delivered the opening keynote address at the CommsDay Summit 2020: ‘Redefining Tomorrow. Together’. Mr Sims focused on the critical role of the communications sector during the current crisis and the delivery of better services while maintaining longer term competition and efficiency in the market.

Transcript: 

Check against delivery.

Introduction

The public health crisis we are currently facing is unprecedented and appalling.

It is causing severe disruption for all of us, and is devastating for so many in a range of different, unpredictable ways.

We all know people who are now unemployed when they never thought this would occur, or who have seen their business shattered. Then we have the unknown level of casualties yet to come from COVID-19.

Governments are rightfully implementing measures necessary to protect the community, and the economy.

These are testing times for all sectors of the economy. None more so than communications.

I have no idea how long this crisis will last. This depends on health issues well beyond my expertise.

I do know that we must all work together to avoid a savage destruction of businesses, and of human and other capital, without losing sight of the economy’s long-term health.

Right now, the ACCC is focused on the current crisis and how we can contribute to the delivery of better communication services while maintaining longer term competition and efficiency in the market.

Today, I want to speak about the importance of the communications sector during this crisis in three ways.

  1. Our present situation
  2. What more needs to be done
  3. Other ways in which the ACCC is responding to these changed circumstances

1. Our present situation

During this COVID-19 pandemic, we have all become acutely aware of how important broadband services and connections are if we are to stay productive and engaged, whether at work or, for most of us, at home. And most importantly, at a time when social distancing is mandated, the vital role they play in keeping us connected and getting through this crisis together.

We are seeing encouraging signs that the sector is responding well to the crisis.

NBN data traffic is up 70 per cent during the business hours.

There has been a 50 per cent increase in mobile call volumes on some routes and this appears to have impacted a modest percentage (say, 3–4 per cent) of calls.

Retailers are increasing plan allowances or reducing excess charges to help their customers adjust, and they should be applauded for this.

The recent data from our now regular Measuring Broadband Australia test units are also encouraging, showing daytime NBN speeds have not been impacted, and are holding up well on most evenings. Average NBN speeds in last Wednesday’s busy evening period, for example, were just as good as we saw on an equivalent Wednesday in February, with performance above 80 per cent of maximum plan speeds.

It is clear that NBN Co’s temporary boost in network capacity which allows RSPs to increase their capacity on the network by up to 40 per cent at no extra cost for three months is underpinning these encouraging results. We are much better placed while this measure remains in place, so we must congratulate NBN for this move.

This is not to say that there will not be pain points for individual consumers who were previously having problems, such as some FTTN and fixed wireless customers. And some will need assistance in remotely accessing their work systems or coming to grips with new applications.

Like many, I am having to acquire new skills to work in an environment where I take meetings or do TV interviews on Skype, or even to deliver this address via Zoom.

2. What more needs to be done

The ACCC is playing its part in a number of ways.

We have established the ACCC’s COVID-19 Taskforce which is monitoring and gathering daily intelligence about emerging issues, and working to ensure consumers and businesses understand their rights and obligations when dealing with cancelled events, travel or services.

For example, some subscription services are now materially different from what people signed up for with the cancellation of most live sport. Consumers must be given a choice if this is what they want to keep paying for.

While some have waived their monthly fees, we are receiving complaints and observe generally, that many companies allow you to sign up online but only allow you to disconnect through a call centre. While we understand many call centres are facing challenges, it is inappropriate that many customers who under financial pressures are unable to cancel services.

As many of you know from our recent announcements, we are authorising, or making legal, what would otherwise be considered anti-competitive activity in breach of the Competition and Consumer Act (CCA).

At a time of crisis such as in war or with a pandemic, where there is a common enemy to fight for the nation’s survival, and so a sense of national purpose, co-ordination can be both efficient and carry little or no downside.

Without a common enemy, of course, in normal times, co-ordination leads to complacency, inefficiency and higher prices.

Under the CCA the ACCC is allowed to authorise conduct that could otherwise be anti-competitive, if the conduct is likely to produce public benefits that outweigh any detriment. This in essence involves competitors getting together to co-ordinate their response and share resources and information.

In response to the pandemic, the ACCC is working to prioritise an influx of authorisation applications, including requests for urgent and immediate interim approval, from businesses across the economy wanting to work together. We have, for example, authorised banks to jointly provide debt relief, supermarkets to ensure their shelves are stocked with Australia’s plentiful food and groceries and medical equipment suppliers to expand capacity. You will also be aware of the NBN interim authorisation which I will touch on shortly.

There are many benefits to these authorisations.

Competitors have been able to co-operate as they need to, almost immediately.

They have comfort they are free from any risk of legal action from the ACCC, and others. By contrast, general statements of regulatory forbearance are much less certain, and what can and cannot be done is less clear for firms.

Through the authorisation process, the ACCC can review these COVID-19 proposals and guard against any unintended, longer term anti-competitive consequences. These approvals are also short term and can be revoked when the crisis is over. There will be a clear line concerning when co-operation among competitors is and is not allowed.

We will want vigorous competition to drive the recovery when it comes.

Last week we granted interim authorisation to initiatives nominated as crucial in keeping people connected and their services running well during the Covid-19 pandemic.

This interim authorisation allows NBN Co and Australia’s five biggest RSPs, who together formed a special working group, which Aussie Broadband has recently joined, to immediately coordinate on the significant surge in network demand. And also to provide a support package for consumers and small businesses adversely impacted by the pandemic.

While the public consultation process on the merits of the substantive application for authorisation are continuing, we consider there is likely to be significant benefits from these initiatives.

Some specific examples: 

  • In particular geographic areas where services are running slowly due to data congestion, the members of the working group can share network resources to improve connectivity in those locations;
  • The authorisation would also allow the working group members to develop an industry approach to provide support for small businesses and vulnerable or other consumers who may no longer be able to afford communications services.

In general, we consider the authorisation is likely to increase the ability of NBN Co and RSPs to continue providing critical services which people use for a range of activities such as e-health, working from home, accessing online education for school aged children and continuing to stream content during these difficult times.

To ensure greater transparency, the ACCC’s interim approval is subject to certain reporting obligations. These will require NBN Co to report to the ACCC on a timely basis about any material decisions the Special Working Group makes, and to provide information to other service providers affected by those decisions. The ACCC will also be an observer on the special working group.

It remains important that adjustments are widely known and understood across the sector, and any impact on end-user services is clearly communicated to the public. This allows anybody affected to make their own complementary adjustments, or put forward alternatives, if they consider the adjustments are unreasonable.

3. Other ACCC measures

The authorisations are not our only focus.

As already advised we are ready to accept further changes to Telstra’s migration plan so that it keeps more services active on its PSTN, ADSL and cable broadband networks where needed to promote service continuity.

Similarly we welcome the Optus decision to suspend mandatory disconnection actions for its cable services for the next three months.

And without at all wishing to downplay the encouraging responses we have seen so far across the sector, there are still some risks we will be looking to mitigate.

In particular:

  • Helping consumers without a working service get connected, such as those consumers who have moved into premises not yet connected to the NBN.
  • Offering consumers flexibility so they can move to plans or services they will need over this period, and then shift back when their needs reduce.
  • Retailers being open with their customers if they do need to put in place any service restrictions.

At all times, it is very important consumers receive accurate advice to guide their decisions.

We still expect service providers to take reasonable steps to check the capability of NBN connections where consumers look to upgrade as some are doing during this period. If consumers do end up on higher priced plans but cannot obtain the benefit of the promised speed boost, then they should be offered timely compensation in some form.

Last week we outlined our views via position papers on wholesale access terms currently being considered by two NBN-related inquiries.

A hallmark of each of these inquiries is they encourage an NBN that represents value for all retail service segments, and is no less efficient or competitive than the networks it is replacing.

We will, however, now pause these inquiries, examining both NBN entry-level access pricing and wholesale service standards, to allow the communications sector to focus on its response to the COVID-19 pandemic.

The position papers provide our current views of the nature and direction of any final access determination that we may make, once circumstances stabilise. We released the position papers to provide guidance for NBN Co and access seekers if they continue negotiations on new wholesale arrangements, which are due to expire later this year.

We understand there is great interest in the outcome of these inquiries. However, we feel it is appropriate to suspend them while the sector works to address the impact of the COVID-19 pandemic, including the surge in demand for online services.

NBN Co’s recent initiative to allow access seekers to boost their network does temporarily address a key concern we have regarding NBN access pricing for basic services.

Our paper for the NBN Wholesale Service Standards Inquiry sets out our views on measures designed to improve incentives for NBN Co to meet its connection, fault repair and technician appointment commitments.

The proposed measures will also allow for better information sharing and operational support offered by NBN Co to service providers.

We have proposed a framework that offers a daily rebate by NBN Co for delayed connections and unresolved faults instead of one-off rebates; and new rebates for underperforming services.

Importantly, it is proposed that current missed NBN appointment rebates are increased to $75 and that these be entirely passed on to customers by retail service providers.

We started our service standard inquiry at a time when consumer complaints about their NBN connections had risen dramatically. Our clear objective in the inquiry was to ensure that any improvements at the wholesale end flowed through the supply chain to benefit customers.

While the inquiry is on pause, we understand that the ACMA will look at whether any further changes need to be made at the retail end to ensure that better service standards lead to better consumer outcomes.

The ACCC and the ACMA will work closely together during this pause to ensure there is a clear and consistent framework for industry.

The second position paper, for the NBN Access Pricing Inquiry, sets out what we consider to be fair, affordable prices for basic speed NBN services of 12/1 Mbps. This would mean consumers moving to the NBN from legacy ADSL and other services do not struggle to find an affordable plan.

As well as benefitting consumers on entry-level plans, we believe our proposed access arrangements will stimulate more competitive prices for higher-speed NBN plans.

We will also consider other measures to reduce uncertainty over the wholesale price changes that access seekers could expect over time, since uncertainty can result in higher prices or reduced quality and product offerings for consumers.

Conclusion

The communications sector always has a critical role to play in keeping people connected, and never more so during this unprecedented global crisis.

What will be fascinating, however, will be the extent to which our world is permanently changed by the current crisis.

I am confident e-shopping will not return to pre-crisis levels; with more people exposed to the convenience of e-shopping why would they revert?

Both e-health and e-education have been much talked about for years but they are now necessarily being embraced. Again, I suspect use of both will be permanently boosted.

Surely Skype or Zoom meetings will not return to pre-crisis levels. I know that next time someone wants me to do morning or weekend TV interviews I will simply say 'Skype me'.

This horrible crisis is, therefore, also an opportunity.

Thank you for time today.

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