Over-the-top messaging allows Australia to stop regulating SMS services

The Australian Competition and Consumer Commission (ACCC) has announced its draft decision to continue regulating the nation's mobile terminating access service (MTAS) for voice services, but no longer for SMS services.

According to the regulator, with access to and competition from over-the-top messaging services such as WhatsApp, SMS regulation is no longer required.

"The ACCC has formed the draft position that SMS termination on a mobile network should not continue to be a declared service. The key reason for this position is the growth in the use of OTT messaging services that we consider have emerged as substitutes for SMS services in the retail market," the ACCC's Domestic Mobile Terminating Access Service Declaration Inquiry: Draft Report [PDF] said.

"Because OTT messaging services do not rely on MTAS to connect with end users on other networks, SMS termination no longer represents a bottleneck to accessing the end user."

While SMS termination was fairly recently declared in 2014, the ACCC said the market has "changed considerably" since then.

"In particular, smartphone penetration and the use of non-SMS messaging services have increased significantly. For example, OTT services such as Facebook Messenger, iMessage, WeChat and WhatsApp are widely used and do not rely on MTAS to access other end users," the regulator explained.

However, voice services will continue to be regulated.

"Over-the-top voice services are not yet substitutes for mobile voice calls, as they do not offer the same quality or access to services such as Triple Zero," ACCC Chair Rod Sims said.

"We are therefore proposing to continue declaration of MTAS for voice services."

The ACCC is accepting submissions on its draft report until May 31, 2019, after it kicked off its consultation on the matter in August last year.

"Among the most significant changes are the rollout of the National Broadband Network (NBN), closure of 2G mobile networks and increased investment in 4G/LTE networks, forthcoming deployment of 5G mobile networks, and the imminent entry of a new MNO, TPG Telecom," the ACCC said at the time.

"Other developments include the continuing growth of OTT services, and the current pricing of retail mobile services, including calls and SMS."

The ACCC had last announced a public inquiry into the MTAS in May 2014 after a lengthy review into the service, with the consumer watchdog revealing its intention to regulate SMS pricing for the first time.

In August 2015, the ACCC then published its final decision, saying that mobile network operators can charge each other and fixed-line network operators 1.7 cents per minute for calls, and 0.03 cents per SMS. That decision holds until June 2019.

The rate to be charged for calls was reduced by more than half -- costing Telstra hundreds of millions of dollars in revenue -- from 3.6 cents per minute, with the ACCC saying it had based its decision on comparative charges around the world.

Both Telstra and Vodafone Australia had objected to the regulation of SMS pricing.

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