I have today asked the Productivity Commission to report within six months on International Telecommunications Market Regulation. The inquiry will examine the prevailing and emerging settlement arrangements in international telecommunications, and in particular will determine whether they provide the right incentives for investment and whether they result in higher than necessary international call prices.
To date we have witnessed substantial benefits flowing from the Governments reforms of the telecommunications sector, with consumers experiencing lower prices and improved quality and choice. This inquiry will identify any barriers that might prevent further benefits flowing to consumers and businesses in respect of international telephone services.
This is an important inquiry as it will provide the opportunity for a comprehensive review of settlement arrangements and will usefully contribute to our understanding of the complex emerging issues in international telecommunications.
The terms of reference are attached.
The Commission will shortly release an issues paper and invite expressions of interest from parties wanting to participate in the inquiry. I encourage all interested parties to make submissions to the Commission and to attend public hearings.
Contact:
Penny Farnsworth
Assistant Treasurers Office
(02) 6277 7360
For further information about the Commissions inquiry process contact:
Mr Jim Roberts
Acting Assistant Commissioner
(02) 6240 3246.
23 February 1999
Attachment
International Telecommunications Market Regulation
PRODUCTIVITY COMMISSION ACT 1998
I, ROD KEMP, Assistant Treasurer pursuant to Parts 2 and 3 of the Productivity Commission Act 1998 hereby:
- Refer International Telecommunications Market Regulation for inquiry and report within six months of receiving this reference. The Commission is to hold public hearings for the purpose of the inquiry.
- Specify that in making its recommendations, the Commission aim to improve the overall economic performance of the Australian economy.
- In particular, request that the Commission examine and report on:
- the various settlement arrangements which exist in the international telecommunications market (for example accounting rates and internet peering models) with a focus on any emerging arrangements in the international carriage services component of that market;
- whether international agreements or asymmetric national policies concerning market conduct and market structure may give rise to distortions or mispricing of the above settlement arrangements, including a discussion of the welfare implications for representative market participants;
- the competitive conduct and investment behaviour of Australian firms in the international telecommunications market both domestically and internationally (for instance their participation in global alliances and new infrastructure investment) and whether any linkages may be drawn with prevailing international settlement arrangements;
- community benefits from reform of settlement arrangements, examining both the domestic and international components of the international telecommunications market, including:
- benefits attributable to previous reform of settlement arrangements;
- benefits attributable to increased domestic competition, especially since 1 July 1997;
- potential benefits from further reforms; and
- any evidence on the effect of foreign policies on pricing and market access on Australian net traffic flows; and
- options for reform, including those appropriate for consideration in the context of future GATS negotiations for telecommunications from the year 2000.
- Specify that the Commission:
- take account of any recent studies undertaken, including Australias official involvement in international fora; and
- have regard to the established economic, social and environmental objectives of the Australian Government.
23 February 1999