1. Nicholls: ACMA RadComms 2011 26 May How many, how much? Promoting competition in the context of spectrum policy Rob Nicholls General Manager, ACCC rob.nicholls@accc.gov.au +61 2 9230 3854 Slide: 1

2. Nicholls: ACMA RadComms 2011 26 May Agenda Introduction – the role of the ACCC Legislative framework Acquisition of spectrum Competition limits in the auction processes Conclusions Slide: 2

3. Nicholls: ACMA RadComms 2011 26 May Introduction – the role of the ACCC ACCC promotes competition and protects consumers Statutory test in the CCA for telecommunications activity is the long-term interests of end-users criteria: –Promote competition –Any-to-any connectivity –Encourage efficient investment in, and use of, infrastructure –Have regard to commercial interests of players Let the market decide and intervene where there is market failure Intervene to protect consumers Slide: 3

4. Nicholls: ACMA RadComms 2011 26 May Legislative framework The Telecommunications Act 1997 generally operates subject to the Radiocommunications Act 1992 except the allocation or authorisation of spectrum licences which are subject to s.577J and s.577K of the Telco Act ACCC and ACMA work together on a number of issues and separately on others under each of the Radiocommunications Act 1992 and the Telecommunications Act 1997. The key spectrum use area where there is a reference to the ACCC by the ACMA are competition limits under s.60 Slide: 4

5. Nicholls: ACMA RadComms 2011 26 May Radiocommunications Act 1992 Primary link between spectrum management and competition law is in the Radiocommunications Act 1992 Issue of either a spectrum licence or an apparatus licence is treated as the acquisition of an asset under the CCA - Radiocommunications Act 1992 s.71A and s.106A Authorisation of use under either a spectrum licence or an apparatus licence is treated as the acquisition of an asset under the CCA - Radiocommunications Act 1992 s.68A and s.114A

6. Nicholls: ACMA RadComms 2011 26 May Acquisition of spectrum Section 50 of the CCA prohibits “acquisitions of … the assets of a person where the acquisition would have the effect, or be likely to have the effect, of substantially lessening competition in a market in Australia”. No legislative requirement for notification Notification advisable in light of ACCC’s power to block acquisition Usually a “voluntary” clearance process Slide: 6

7. Nicholls: ACMA RadComms 2011 26 May Acquisition of spectrum Three options for seeking clearance –Informal clearance – no action letter –Formal clearance – application to ACCC with appeal rights –Authorisation – application to Tribunal that public benefit outweighs any substantial lessening of competition Formal clearance and authorisation confer immunity from challenge Informal clearance provides no immunity but is most commonly used For spectrum acquisition, the process has historically been reasonably quick

8. Nicholls: ACMA RadComms 2011 26 May Example – Hutchison and AAPT On 23 August 2007 the ACCC decided not to intervene in the Proposed Asset Sale. The ACCC considered that the Proposed Asset Sale was unlikely to substantially lessen competition in the Retail Mobile Services Market. Of relevance to the ACCC's analysis was that the spectrum in question, which could be utilised to provide telecommunications services, was not in use prior to the Proposed Asset Sale.

9. Nicholls: ACMA RadComms 2011 26 May Other examples Telstra and Commander The ACCC noted that the acquisition represented only a minor increase in the spectrum held by Telstra, and the presence of other potential providers of wireless broadband and mobile TV services. The ACCC concluded the acquisition was unlikely to have had the effect of substantially lessening competition. Optus and Qualcomm The ACCC considered that the proposed acquisition was unlikely to substantially lessen competition in the relevant markets. Of relevance to the ACCC's analysis was that the spectrum in question was not in use prior to the proposed acquisition and was unlikely to be used to facilitate new entry by a prospective mobile network operator.

10. Nicholls: ACMA RadComms 2011 26 May Competition limits in the auction processes Section 60 of the Radiocommunications Act 1992 sets out the procedures for allocating spectrum licences Under this section, the procedures can (ss.60(5)): –impose spectrum use limits on any one person or a specified person; or –impose total spectrum use limits on a specified group of persons. These limits can include limits by spectrum, geography or population reach (ss.60(6)) and can include a limit of zero (ss.60(6A)) However, the ACMA must not impose limits unless directed to do so by the Minister (ss.60(9)) Slide: 10

11. Nicholls: ACMA RadComms 2011 26 May Conclusions Acquisition of a spectrum right, regardless of whether this is a spectrum or apparatus licence or and authorisation to use a licence, is the acquisition of an asset under s.50 of the CCA The clearance process is not complex Competition limits promote competition ACCC entrusted with the promotion of competition and the protection of consumers Slide: 11

12. Nicholls: ACMA RadComms 2011 26 May How many, how much? Promoting competition in the context of spectrum policy Rob Nicholls General Manager, ACCC rob.nicholls@accc.gov.au +61 2 9230 3854 Slide: 12