ACCC to stop regulating SMS services due to over-the-top messaging

The Australian Competition and Consumer Commission (ACCC) announced on Friday that it will extend its regulation of the nation's mobile terminating access service (MTAS) for voice services for another five years, but will not do the same for SMS services.

The current regulation for mobile voice and SMS services will expire on 30 June, with the declaration of voice terminating services to be extended to 2024.

The consumer watchdog's decision mirrors its draft decision that it made back in May.

The ACCC had kicked off its MTAS consultation in August last year, looking into whether the service that allows consumers to send and receive calls and messages between mobile phone networks still needed to be regulated. 

Following the inquiry, the ACCC formed the view that mobile voice services should continue to be regulated as telcos continue to have a monopoly over the provision of voice termination on their networks and there are currently no effective alternatives for retail voice services. 

"While consumers' use of OTT voice applications such as Skype and WhatsApp has increased, voice applications are unlikely to be an effective substitute for mobile termination at this point in time," the ACCC said in the inquiry's report.

See also: ACCC ponders merger law revamp to stay relevant in the digital era 

For SMS services however, the ACCC said that mobile messaging services have "changed significantly" due to over-the-top services such as WhatsApp and iMessage, and will no longer need to be regulated.

This is despite app-to-person (A2P) service providers putting forward that, without regulation, mobile network operators would be able to charge higher prices. The ACCC ultimately came to the view that there were sufficient alternatives to A2P SMS to constrain wholesale SMS MTAS prices, including over-the-top messaging services, emails, and in-app chat platforms.

"When we decided to regulate wholesale SMS termination services in 2014, mobile operators were charging each other significantly above cost for these services, with a flow-on impact for retail SMS prices," ACCC Commissioner Cristina Cifuentes said.

"We have found that this need to regulate SMS termination has disappeared over time because of increasing competition from over-the-top services ... and because most mobile plans in the market now offer unlimited 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. 

Both Telstra and Vodafone Australia had objected to 2014-15 MTAS inquiry's decision to keep regulating SMS pricing, and the new decision is a welcome reprieve for Vodafone.

"Vodafone welcomes the ACCC's decision to deregulate SMS terminating services and to continue the regulation of voice terminating services. Vodafone has consistently advocated against the regulation of SMS terminating services," a Vodafone spokesperson told ZDNet. 

"Vodafone believes that the ACCC's decision will result in better outcomes for Australian consumers, particularly those most vulnerable to scams."

Updated at 2.20pm AEST, 28 June 2019: Added comments from Vodafone.

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