ACCC clears 5G as a substitute for fixed-line broadband

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ACCC clears 5G as a substitute for fixed-line broadband

Sets high bar for a future ruling.

NBN Co hit a hurdle in its bid to rein in competition from 5G operators late yesterday, with Australia’s competition watchdog more clearly defining when it will consider 5G “substitutable” for fixed-line services.

The Australian Competition and Consumer Commission (ACCC) late yesterday confirmed a December draft decision to extend a set of regulations imposed on fixed-line rivals to NBN Co by a further five years.

Through the process, the ACCC had been under pressure from NBN Co to also regulate wireless competitors, including cellular providers of ‘home broadband’ 5G services.

“NBN Co considers that mobile technology, including 5G technology, are effective technical substitutes for fixed-line broadband services,” NBN Co had said. [pdf]

NBN Co reinforced that position last month, arguing 5G operators were challenging its monopoly status in many market segments.

But the ACCC has now formally rebuffed NBN Co’s attempts to have 5G operators classified as competitors to the NBN in the same way that other providers of “superfast” fixed-line services are.

In denying NBN Co’s request, the ACCC took the opportunity to set even clearer guidelines on when it would entertain 5G services as being a substitute for a fixed-line service.

The issue of substitutability has existed for some time, though so has the ACCC’s opposition to declaring 5G and fixed-line broadband as competing products.

In its draft decision in December [pdf], the ACCC said 5G fixed wireless services are “potentially substitutable” and “are becoming a substitute for fixed line broadband services due to their increasing speeds and data allowances.”

“However, wireless broadband services are currently substitutes in only a limited number of areas and scenarios,” the ACCC said.

“The extent to which wireless broadband services can be regarded as an effective substitute depends on geographic coverage, usage needs and income.”

The ACCC promised a more comprehensive assessment in its final decision, and has delivered in that regard, with new language that sets a high bar for 5G to ever be considered a substitute for a fixed-line service.

That new language suggests that 5G - or even emerging satellite services like Starlink - would need to have the same “comprehensive” and “universal” characteristics as the NBN before they would be subjected to the same kind of rules that keep NBN Co’s fixed-line competitors in check.

“The ACCC maintains the view that broadband services offered over wireless alternatives (such as mobile, satellite and fixed wireless) are not comprehensive substitutes to a fixed line broadband connection at this time,” it said. [pdf]

“The ACCC recognises that there are some ongoing developments in wireless technologies, such as the 5G rollout and deployment of LEO [low Earth orbit] satellite systems, which have the potential to become a substitute for fixed-line broadband services where these wireless services are offered and as more unlimited data plans become available.

“However, wireless technologies are unlikely to offer a universal substitute for fixed line broadband services across Australia within [five years].”

The ACCC said that it would “consider regulating these networks if a compelling case could be made that these networks hold significant market power.”

That would partially be based on reach; the ACCC noted that “at this stage, the impact of wireless as a substitute for fixed line broadband is likely to be small due to its limited footprint.”

“This means only a limited number of consumers currently have a choice of access technology,” the commission said.

“The rapid pace of development in the superfast broadband market, and the degree to which end-users may substitute their fixed line service for wireless technologies may change as further investment occurs, additional spectrum is released and more consumers have access to wireless services. 

“It is clear, however, that the extent of competition is likely to vary area-to-area. 

“Those living in densely populated areas are likely to benefit more or sooner than those where it is less commercially attractive to build competing infrastructure.”

That sets a much higher bar than simply having an NBN-like product construct in-market.

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