ACCC head backs Telstra on tiered broadband debate

Rod Sims has been a "long-time advocate of congestion pricing for a range of other infrastructure networks"

In a speech delivered today to the Australian-Israel Chamber of Commerce, Rod Sims, the chair of the Australian Competition and Consumer Commission endorsed Telstra's Kate McKenzie's call for a debate on tiered pricing for broadband customers based on the quality of service they desired.

Most internet plans, outside of the speed-based pricing for the National Broadband Network, currently centre on charges for monthly data allowances.

Sims said that as content providers increasingly rely on online channels for delivery, service providers' networks face the threat of congestion.

"Content delivery methods are increasingly creating opportunities for new market participants and prompting content providers, both traditional broadcasters and the established online players, to develop and diversify their existing services," Sims said.

"These developments have the potential to stimulate pro-competitive outcomes and increase consumer choice and quality of experience. This additional content, however, requires capacity, which can cause network congestion."

Sims said that as a "long-time advocate of congestion pricing for a range of other infrastructure networks", he welcomed McKenzie's call for an industry discussion.

However, he repeated previous ACCC warnings that network traffic management strategies introduced by service providers must not be anticompetitive.

"[G]iven the rate of change in these markets, and the potential for some players to use market power in one market to gain leverage in another, markets can tip toward anti-competitive structures and outcomes in a very short space of time," Sims said.

"There is a risk that the current diversity of services and participants could quickly dissipate or consolidate."

Sims also told the audience that if early efforts to structurally separate Telstra's retail and copper network arms had been successful, the telco industry "would be more competitive than it is today".

"We succeeded with structural separation in electricity, but lost in telecommunications," Sims said.

The telco finally agreed to structural separation in 2009, as part of the push by the government for the National Broadband Network.

The ACCC head said that in many ways, "regulating the NBN is more straightforward than regulating Telstra’s copper wire services" for the competition watchdog. Sims reiterated to the audience the ACCC's call to have a greater role in overseeing the network's operation.

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Tags Telstranational broadband networkacccAustralian Competition and Consumer CommissionNational Broadband Network (NBN)

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