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AUS: Mobile long-distance services Draft Report

The Australian Competition and Consumer Commission today issued its Draft Report on whether a long distance mobile originating service should be 'declared'.

On the information to date, the ACCC is not satisfied that such declaration will promote the long-term interest of end-users, the relevant test under the Trade Practices Act 1974.

The proposed service would let service providers supply the long-distance transmission part of long-distance (including international) calls made from mobile phones.

"The decision does not mean the ACCC is fully satisfied with the existing level and pace of mobile price competition, nor does it mean that it is 'vacating the field' in terms of its regulatory role in the mobile services market," ACCC Chairman, Professor Allan Fels, said today. "However, there are differences in both the structure and dynamics of the mobile services market, as compared to the fixed market, which suggest a different regulatory approach is appropriate.

"For example, unlike fixed telecommunications services, mobile services in Australia are presently delivered by three networks operators - Telstra, Optus and Vodafone - plus a number of resellers of mobile services, including Hutchison, One.Tel and AAPT. These latter companies have also acquired spectrum and are starting to roll out their own mobile networks. When complete, Australia will have at least five mobile network operators in its main population centres and up to four operators in regional areas - one of the highest number of suppliers of mobile services in the world.

"Although price competition in mobile services has generally been focussed on access and handset prices, there are now increasing signs that competition for call charges is intensifying. This is likely to continue during the foreseeable future, particularly as market growth slows and new suppliers enter the market.

"Consequently, the ACCC found that declaration of this long-distance based service is unlikely to lead to more vigorous competition than would happen in the absence of declaration," Professor Fels said.

"However, the ACCC remains concerned that mobile price competition intensifies quickly. The ACCC will continue to monitor the development of competition in the market and take action through its regulation of other mobile services.

"For example, mobile terminating services are already declared and apply to GSM and AMPS networks. These are the services all other carriers and service providers pay to terminate a call on a mobile network.

The ACCC can, if needed, determine the terms and conditions, including prices, for supply of these services that can also have a direct bearing on mobile retail prices. The ACCC has separately made a decision to reject an undertaking from Telstra in relation to its mobile terminating services and is also currently conducting a number of arbitrations in relation to these services.

The ACCC is also considering whether mobile number portability should be mandated. It has been encouraged by the significant number of submissions, including from most existing carriers, supporting mobile number portability.

The ACCC's decisions are likely to have a significant effect on forcing the pace of competition in the mobiles market.

During the inquiry, the ACCC noted plans by Telstra and a number of potential entrants to roll out CDMA networks. The ACCC understands the Telecommunications Access Forum will soon consider whether mobile terminating services provided by CDMA networks should be included in existing mobile declarations. It would support TAF's efforts.

The ACCC is seeking submissions on the draft report. It may also hold a public hearing to discuss particular issues, depending on the matters raised.

The ACCC expects to issue its final report in October 1999.

The ACCC's draft report on whether to declare a long distance mobile originating service will be available on its web-site: http://www.accc.gov.au.

23 August 1999

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