The Australian Competition and Consumer Commission today issued its Final Report on the pricing principles to be used in arbitrations of disputes over the terms and conditions of access to GSM (global system for mobile) and CDMA (code division multiple access) mobile termination services.
GSM and CDMA are the dominant international, second generation (2G), digital mobile transmission systems.
"CDMA mobile services are a newly declared service that needs the appropriate, consistent pricing principles to ensure industry has certainty and confidence in the regulation of mobiles", ACCC Acting Chairman, Mr Sitesh Bhojani, said today.
The ACCC declared CDMA services to reduce anti-competitive pricing and encourage lower fixed-to-mobile call prices.
"Establishing the pricing principles will help to promote competitive outcomes in the sector".
In June 2002, the ACCC issued its draft pricing principles for these services after their declaration in April this year. The ACCC considers that there should be consistency between the pricing principles used for GSM and CDMA services.
Similar factors to those relating to GSM services are relevant to CDMA services, namely:
- Control over access to terminating services by mobile carriers
- The relative lack of consumer awareness of the prices being paid for mobile termination, and the network on which their calls are being terminated.
These factors result in mobile carriers sustaining above cost access prices for CDMA termination. Accordingly, the competitive forces on CDMA termination are seen as remaining relatively weak.
"These factors raise concerns that integrated mobile carriers could restrict price competition in the downstream market for fixed-to-mobile calls".
The pricing principles provide that wholesale mobile prices are linked to the price competition in the retail market for mobile services.
"The ACCC will be monitoring developments to ensure business and residential consumers benefit", Mr Bhojani said.
The ACCC expects to review these pricing principles, along with the mobile services market generally, in 2003.