Communications Sector Market Study Final Report April 2018
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Communications Sector Market Study Final report April 2018 accc.gov.au ACCC communications sector market study final report Consumers are getting better value, but there is considerable concentration in key service markets. MOBILE PHONE NBN 3.1% 4.5% real decline in real decline in prices prices in 2016-17 in 2016-17 49% 24% in data quotas in in data quotas in 2016-17 2016-17 89% 94% of services supplied of services supplied by three providers in 2017 by four providers in 2017 The NBN is more than half way through its rollout however for some consumer segments wireless may increasingly be a viable substitute. AVAILABLITY POTENTIAL SUBSTITUTES NBN available 100GB+ to 6.3 million Download quotas on premises with 3.6 some wireless plans have million activations reached over 100GB by March 2018 Regional Australians have been among the 30% of fixed broadband first to benefit from the subscribers would consider NBN with 56% of switching to a wireless activations in regional service Australia Some immediate NBN issues are being tackled. $$$ NBN 50Mbps ACCC inquiry into ACMA imposing 37% increase in CVC and CVC NBN wholesale rules to improve between September and capacity price service standards NBN consumer December 2017 promotion experience There is rapid growth and development of emerging services and also some potential issues to monitor. 80% of Over $1b Industry predicts Industry predicts businesses used Australian data content delivery the Internet of cloud computing centre market networks will carry Things will provide in 2016 in 2017 approximately 70% significant uplift to of all trac by 2021 GDP by 2025 OTT services continuing to While e-SIMs may increase transform use of communications competition between mobile networks and disrupt markets service providers there may be barriers for smaller providers in oering e-SIM devices Fixed and wireless networks will continue to evolve, influenced by technology, new services, consumer preferences and government policy. NBN INCREASING CONVERGENCE WIRELESS Wireless 5G Potential for NBN to Fixed be split into competing networks iv Communications Sector Market Study—Final report Contents Glossary vi 1. Executive summary 1 1.1 Communications sector market study 1 1.2 Key points 2 1.3 State of competition in the supply of broadband and voice services 5 1.4 Transitioning consumers to the NBN 5 1.5 Medium term NBN issues 6 1.6 Key intermediate inputs 6 1.7 Network competition and convergence 7 1.8 Emerging services and issues 7 1.9 Policy implications and priorities 8 2. Recommendations and ACCC actions 9 2.1 Recommendations 9 2.2 ACCC actions 10 3. Introduction 13 3.1 The market study 13 3.2 The communications sector 15 4. Current state of competition in communications services 20 4.1 Broadband, voice and messaging services 20 4.2 Network technologies 44 4.3 Aggregation services 53 4.4 Transmission and dark fibre services 63 4.5 Internet interconnection 71 4.6 Data centres 76 4.7 Content delivery networks 79 4.8 Over-the-top content services 80 4.9 Cloud computing 83 4.10 Internet of Things 87 5. Immediate issues requiring action to promote competition 91 5.1 NBN wholesale access prices 91 5.2 NBN wholesale services standards 104 5.3 Critical wholesale inputs for the supply of fixed line broadband services 107 5.4 Consumer choice and information 119 6. Issues requiring monitoring and potential future action 141 6.1 Competition between network technologies 141 6.2 Potential competition concerns in relation to newer communications services 150 7. Policy implications and priorities 155 7.1 Current regulatory and competition arrangements 155 7.2 Market structure evolution—NBN disaggregation 156 7.3 Spectrum management 158 7.4 Data availability and use: a new Consumer Data Right 161 7.5 Mobile Black Spot Program 162 7.6 Regional Broadband Scheme 163 Appendix A 165 Appendix B 166 Potential future scenarios for the Australian communications sector 166 Communications Sector Market Study—Final report v Glossary 3G 3rd generation mobile communications technology 4G 4th generation mobile communications technology 5G 5th generation mobile communications technology ACCAN Australian Communications Consumer Action Network ACCC Australian Competition and Consumer Commission Access seekers Telecommunications companies that seek access to declared services (that is, the right to use the declared service) ACL Australian Consumer Law ACMA Australian Communications and Media Authority ADSL Asymmetric digital subscriber line ARPU Average revenue per user AVC Access Virtual Circuit AVOD Advertisement funded video on demand B2B Business to business BPMR Broadband performance monitoring and reporting program CCA Competition and Consumer Act 2010 (Cth) CDN Content delivery network CIS Critical Information Summary CLI Caller Line Identification CSG Customer Service Guarantee CVC Connectivity Virtual Circuit Dark fibre Uncontended, unlit point-to-point fibre optic cable that requires connecting equipment and management system to supply a transmission service Data centre co-location Data centre where a business can rent space for servers and other hardware service and connect them to network service providers DBDR Dimension Based Discount for service providers DSLAM Digital Subscriber Line Access Multiplexer DTCS Domestic transmission capacity service ESAs Exchange Service Areas FAB Fibre Access Broadband FTA Free-to-air FTTB Fibre to the building FTTC Fibre to the curb FTTN Fibre to the node FTTP Fibre to the premise FTTx Fibre to the x, where ‘x’ refers to any or all of the above Gbps Gigabits per second GHz Gigahertz HFC Hybrid Fibre Coaxial HHI Herfindahl-Hirschman Index IaaS Infrastructure as a Service vi Communications Sector Market Study—Final report IoT Internet of Things IoTAA IoT Alliance Australia IP Internet Protocol IPTV Internet Protocol television ISP Internet service provider IXPs Internet exchange points Layer 2 The data link layer of the open systems interconnection model. The data link layer provides a connection between two fixed end points in a network to facilitate the transmission of data traffic. Layer 3 The network layer of the open systems interconnection model. The network layer provides a switching function that enables the routing of traffic to its destination address. LPWA Low-power wide-area, a wireless telecommunications technology that allows a low bit rate signal to be transmitted over a large area LSS Line Sharing Service LTIE Long-term interests of end users M2M Machine to machine Mbps Megabits per second MNO Mobile network operator MVNO Mobile virtual network operator NBN National Broadband Network NBN Co NBN Co Limited NNI Network to Network Interface OECD Organisation for Economic Cooperation and Development Ofcom Office of Communications, UK communications regulator OTT Over-the-top content/services PaaS Platform as a Service POI Point of Interconnection POP Point of Presence RBS Regional Broadband Scheme RKR Record keeping rule—under s. 151BU of the CCA, the ACCC has the power to make an RKR and require that carriers and carriage service providers comply with it. The rules may specify what records are kept, how reports are prepared and when these reports are provided to the ACCC. SaaS Software as a Service SAU Special Access Undertaking SBAS Superfast Broadband Access Service SMS Short Message Service STV Subscription TV SVOD Subscription video on demand TC1 NBN Traffic Class 1—highest priority, dedicated capacity traffic class, suitable for voice TC2 NBN Traffic Class 2—business grade traffic class used for delivering high- speed symmetrical internet (supports video conferencing, IPTV, gaming) Communications Sector Market Study—Final report vii TC3 NBN Traffic Class 3—designed to give priority to transactional data such as business applications running on WAN TC4 NBN Traffic Class 4—standard, best efforts traffic class used for delivering residential and small business broadband services TCP Code Telecommunications Consumer Protections Code TCPSS Act Telecommunications (Consumer Protection and Service Standards) Act 1999 (Cth) Tier 1 service provider Large service providers who are vertically integrated and supply wholesale and retail NBN services Tier 2 service provider Service providers that intend to directly connect to the NBN and are using NBN wholesale aggregation services prior to reaching the scale at which this is commercially viable Tier 3 service provider Service providers that do not intend to directly connect to the NBN and will use NBN wholesale aggregation services on an ongoing basis TIO Telecommunications Industry Ombudsman TTOV Telstra, TPG, Optus, Verizon TVOD Transactional video on demand ULLS Unconditioned Local Loop Service UNI-V User Network Interface—Voice, connects the user voice interface to the voice network over the NBN USO Telecommunications Universal Service Obligation VoIP Voice over Internet Protocol WAN Wide Area Network WBA Wholesale Broadband Agreement WiMAX Worldwide interoperability for Microwave Access WLR Wholesale Line Rental viii Communications Sector Market Study—Final report 1. Executive summary 1.1 Communications sector market study We have undertaken this market study at a time of significant change in the Australian communications sector. We noted at the start of the inquiry that the sector is subject to rapid changes in technology, product innovation and consumer preferences as well as major structural change as we transition to the NBN (National Broadband Network). We set out to assess the implications of these trends for the