As the ACCC in Australia looks to roll back some rules over the next five years, in the UK, Ofcom appears set to stay the course
Regulation of wholesale telecoms in Australia is poised to change following a competition authority inquiry
On 25 March 2024, the Australian Competition and Consumer Commission (ACCC) released its final report outlining the findings of an inquiry into whether nine wholesale telecoms services that support the provision of broadband, voice and data transmission should continue to be regulated, or “declared”. The ACCC examined how recent market developments, including the completion of the National Broadband Network (NBN) and declining use of Telstra’s copper network, have changed how telecoms services are accessed, and considered whether competition is protecting Australians who use them. With take-up of the currently unconditioned local loop and line sharing service fast approaching zero, the ACCC will allow declarations for these two legacy network access products to expire on 30 June 2024. As our Fixed Telecoms Tracker shows, access to an SMP operator’s local loops (i.e. LLU) is still regulated in six out of seven major European countries, with the Netherlands the exception.
Some access services will remain given the lack of effective substitutes, but may be subject to modification or partial deregulation
However, the ACCC’s inquiry found that other parts of Telstra’s fixed line network continue to be a bottleneck and exhibit natural monopoly characteristics for voice and broadband services, particularly in regional and remote areas, as well as areas outside the NBN fixed line network. Each for a further five years, the regulator has decided it will:
Given the absence of suitable substitutes, extend the declaration of the wholesale line rental, local carriage service and wholesale ADSL service with no amendments to the service descriptions;
Extend the declaration of the domestic transmission capacity service, while varying the service description to reflect technological changes and removing regulation in geographic areas where competition is effective; and
Extend the declaration of the fixed originating and terminating access services, and vary the service description to reflect the industry trends towards IP-based interconnection.
The ACCC will also release a separate final inquiry report about the declaration of the domestic mobile terminating access service due to the complexity of the issues raised in response to the draft report. Its preliminary view was to preserve the declaration with changes to its service description, including the expansion to application-to-person SMS termination. The ACCC expects to publish this report by June 2024.
In the UK Ofcom formally begins its Telecoms Access Review
The day after the ACCC’s decision, Ofcom formally began its review of regulation that will apply to wholesale telecoms markets in the UK between 2026-2031. According to Ofcom, the Telecoms Access Review (TAR) aims to ensure the country’s digital infrastructure is fit for the future by creating an environment to promote competition and investment in gigabit-capable broadband in order to deliver better services and more choice for consumers. Since Ofcom’s previous review – the Wholesale Fixed Telecoms Market Review (WFTMR) – in 2021, a range of firms (including Openreach and many smaller network builders) have ramped up their rollouts. As a result, gigabit-capable broadband is now available to more than 23.2m homes (78% of the UK), while over 17.1m homes (57%) have access to full fibre. Ofcom expects to publish a consultation on proposals for regulation early next year, with a view to publishing its final decisions in Q1 2026.
Ofcom is unlikely to divert significantly from its current path halfway into its 10-year plan
With the same objectives as the WFTMR of incentivising investment and promoting network competition, Ofcom recognises the need for certainty and stability of regulation, including continuing to support and honour the ‘fair bet principle’ (that allows BT to earn returns above its cost of capital within charge controls). It also states that the previous review set out a 10-year strategy, which means allowing time for altnets to become established post-deployment and drive adoption. At a recent Westminster eForum event, Lindsey Fussell (Group Director, Networks and Communications, Ofcom) said that while Ofcom will not depart significantly from its current strategy, she recognised that aspects of the review will be contentious and that there may be some changes in the market (for example, the upcoming copper switch-off) that mean considering how regulation should evolve. It is notable that Ofcom will be considering issues of take-up and consolidation and, given the review’s focus on the wholesale level, that it will also be analysing the extent to which the market is delivering benefits for consumers and seeking to ensure any remedies it imposes upstream do not lead to costs on them that cannot be outweighed elsewhere.
