The Australian Competition and Consumer Commission today issued its Draft Report recommending pricing principles to cover GSM and CDMA services, the two principal mobile technologies used in Australia.
"The present pricing principles, on which the ACCC would base its determinations in any access disputes, only covers GSM services", ACCC Chairman, Professor Allan Fels, said today. "But as CDMA mobile services have just become a declared service, it is appropriate and practical to extend the pricing principles to cover CDMA as well.
"This is consistent with the ACCC's belief that CDMA and GSM services are close substitutes and that both networks are subject to the same characteristics that allow mobile carriers to sustain high access prices.
"The extension will ensure regulatory consistency and give industry the certainty it requires in the regulatory regime. It will also help to guarantee competition continues to improve in the sector".
The development of the pricing principles follows the ACCC decision in April this year to include CDMA mobile services in the GSM mobile services declaration. The ACCC considered that the wholesale CDMA service was subject to limited competitive forces and was concerned that integrated mobile carriers could restrict price competition in the downstream market for fixed-to-mobile calls. It was judged that declaring CDMA services could reduce the opportunities for anti-competitive pricing and encourage lower fixed-to-mobile call prices.
The ACCC intends to do this by linking wholesale mobile prices to the price competition in the retail market for mobile services.
"The ACCC's draft pricing principles are to make sure the benefits of increased competition in the mobile market are passed onto fixed line users calling mobile subscribers", he said.
"The ACCC will be monitoring developments to ensure these benefits are passed on".
The pricing principles will cover only GSM and CDMA mobile services and are not applicable to other mobile technologies or services such as 2.5G and 3G.
The ACCC is seeking submissions on the Draft Paper from interested parties by close of business, 26 July 2002. The ACCC expects to issue the final pricing principles in August 2002. These pricing principles, along with the mobile services market generally, will be reviewed by the ACCC in 2003.