Australia’s amended competition law to treat telco like any other business

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ITEM: Australia’s Communications Minister plans to repeal laws governing anti-competitive conduct in the telecoms industry. Telstra is delighted. Hardly anyone else is.

According to ZDNet, Comms Minister Mitch Fifield announced the changes last Thursday, under which the telecoms-specific provisions under Part XIB of the Competition and Consumer Act 2010 would be dropped in favor of amendments being made to the general misuse of market power laws under Section 46 of the same Act.

Fifield justified the move saying that the telecoms sector has advanced so much in terms of competition that anti-competitive regulations specific to the sector are no longer necessary, and that an existing general law regulating anti-competitive practices should be sufficient to deal with any problems.

One of the justifications for ditching the telecoms-specific regulations is the fact that the Australian Competition and Consumer Commission (ACCC) has stepped in to enforce those regulations only five times since 1998 – and the last time was in 2006 over Telstra’s wholesale pricing scheme for ADSL services.

Also, reports ZDNet:

… the government says the ACCC has its own regulatory mechanisms to control the telco sector under Part XIC, and because Telstra’s structural separation undertaking (SSU) for the National Broadband Network (NBN) rollout will regulate its behaviour over the next five years.

Perhaps unsurprisingly, Telstra is far more pleased about the repeal that its competition, the Sydney Morning Herald reports:

Telstra was in favour of repealing section XIB of the Competition and Consumer Act 2010 but the change is “certainly not supported in the industry by anyone except Telstra”, spokesman for the Competitive Carriers Coalition chairman Matt Healy said.

“It would appear we have returned to the bad old days when the government acted as though Telstra was the telecommunications industry, and other opinions could be ignored,” Mr Healy said.

When the government floated the idea of repealing Part XIB in September, competitive telcos wrote in saying it was a bad idea. Vodafone Australia commented in its submission [PDF] that while the regulations may not be used all that often, simply having them on the books and providing telcos an avenue of redress if needed gives the market extra incentive to avoid anti-competitive practices.

Optus pointed out in its submission [PDF] that leaving everything to Section 46 was a mistake because the telecoms sector has “unique characteristics that provides a higher risk of anti-competitive conduct than is likely to be present in other industries”:

Notwithstanding the development of competition, sections of the communications market remain highly concentrated and there are number of bottlenecks that can provide a source of market power. Further, there are strong inter-dependencies between firms within the communications market to enable end-to-end services to end-users. This means that the actions of one firm can have broad implications for other firms and the competitive process.

These are pretty good points. Regulations aimed specifically at telecoms players not only address the specific characteristics of that industry, but also states clearly how such regulations apply to them – otherwise telcos charged with anti-competitive behavior could find ways to claim that the law doesn’t apply to them in that specific circumstance.

On the other hand, the ACCC has actually supported the change, saying that it will “remove unnecessary overlap” and make the Competition and Consumer Act more universally applicable across various economic sectors.

So the repeal is essentially an attempt to streamline anti-competitive regulations, rather than repeal them outright. That’s fine as far as it goes, provided the amendments to Section 46 are well written enough to do the job. Even if they’re not, I doubt the changes will result in Telstra re-establishing itself as a monopoly telco, or even killing off most of its competition.

Still, the question remains whether a more generalized anti-competitive law can regulate every sector as effectively as industry-specific ones – especially in a market like Australia where telecoms is as politicized as it is.

Also, Australia is headed into uncharted territory as the telecoms sector undergoes unprecedented transformation – not just in terms of the NBN, but also digital transformation where the very parameters of the sector are being redrawn in terms of who competes against who. So even if Part XIB is redundant or outdated, whatever replaces it will have to take this digital transformation into account.

So arguably a regulatory revamp will be necessary sooner or later. The question is whether the Section 46 amendments are sufficiently future-proofed for the changes that are coming.

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