CD Melbourne Congress: Gilbert + Tobin's Simon Muys

Through the looking glassSome market and regulatory observations and predictions – to 2020

CommsDay Melbourne, October 2014Simon Muys, Partner

Overview

page | 2CommsDay Presentation (final).pptx | October 2014

Market Structure

Regulation

Technology

Heroic assumptions Blind guesses

2020

Pre-emptive and prescriptive regulation?


Why, sometimes I've believed as many as six impossible things before breakfast.

“”

Lewis Carroll, Through the Looking Glass

The NBN story will continue to face challenges

The NBN rollout will happen – but slowly (not 2020)

• The most significant impact of MTM is complexity • ULLS to BSO transition will impact pricing and product

development• Expect limited, if any, meaningful competition for MDUs

– the combination of a VDSL declaration and structural separation will “probably” be enough to deal with the business case, unless you can achieve substantial scale and penetration

• HFC and FTTN will have only one port to the home – so at least the potential for multiple gateways is gone (although query the economics)

CommsDay Presentation (final).pptx | October 2014 page | 4

Technology


The implications of NBN access pricing on residential pricing are yet to be seen

Ofcom 2014 Market Report

Total take up – UK superfast broadband connections

Fixed broadband connection – real average UK monthly price (2013 prices)


A story of continued growth and fragmentation in devices and data use in the home

Ofcom Technology Tracker

The reach of data solutions will continue into the home

• The battle for the home gateway will continue

• The transition to the 4th screen will continue for a couple more years, although tablets will peak soon

• The ‘digital divide’ will become an increasingly important issue for Government

• eHealth will increasingly come of age


The consumer market will be shaped by continuing fragmentation

Technology

• Copper/HFC to NBN will change the ‘demand dynamics’ of bandwidth

– move from fixed (unpredictable?) capacity to flexibility, with scope for the end user to burst capacity for applications

– what becomes of data caps, gardens and ‘on net’ and ‘off net’ content?

• A transformative shift : OTT and app providers can build relationships directly with end users?


NBN demand-driven bandwidth will help OTT providers circumvent the pipe

Technology

NBN will drive more and faster market consolidation

NBN Co will still be in public hands with pressure starting to mount for mission creep

• There will still only be one (cf. Vertigan)

• Expect pressure from smaller players for NBN Co to move into Layer 3 solutions (and this will be attractive to improve the economics)

NBN migration will speed up substantial industry consolidation

• Three integrated mobile players and a couple of serious fixed-only competitors

• There may be some ‘stepping stone’ options based on NBN resellers moving to Layer 2, with greater scale – but overall there will be rationalisation


Market Structure

The ACCC will still be with us, and will still make itself busy

ACCC (maybe) still regulator

• Merits review reintroduced?

More ACCC activity, not less

• Already seeing increased, not decreased, ACCC attention and intervention (e.g. WDSL, WLR, mobile (SMS and roaming), CBD exemptions, non-price terms etc) – and they won’t stay away from Layer 3

• Pricing stability for legacy services– Telco similar to other utility industries dealing with

building block models and declining demand


Regulation

Regulatory attention will shift from network access to the consumer experience

Consumer migration will be the fixed line regulatory issue over the next 5 years

• The key regulatory focus will move from ‘network access’ to ‘customer assurance’ – per the DoC Migration Assurance Process

• A more pragmatic approach to migration, with more focus on a smooth customer transition (even more critical given the greater complexity of MTM messages)

• A wider set of stakeholders will need to be involved – OTT providers, RSPs, large users, MDU body corporates

– implications for NBN Co product development– ACCC role will need to emerge


Regulation

The Migration Assurance Process



“

”Lewis Carroll, Through the Looking Glass

One thing was certain, that the white kitten had had nothing to do with it: — it was the black kitten's fault entirely.

Both technology and the re-entry of a state-funded monopolist will cause complexity in competition policy

• Competition law in the sector will become more complex and less predictable (new villains?)

– bundling across platforms, content and CPE/STB– no case for moving to an EU SMP-based model

• Will there be pressure to reduce the anti-siphoning list – will this be needed to drive cable/NBN take-up?

• What about infrastructure competition at the margins –new developments and the integrated utility model?

• Can the ACCC keep itself out of mobile, when this will become the principal broadband platform for many?


Regulation


A couple of free G+T apps to help you on the journey:

Telco Navigator

A “one-stop-shop” of a comprehensive range of telco-related legislative instruments and commercial documents that you can access anytime and anywhere, regardless of whether you are online or not.

The more than 400 documents have a simple navigation system, explanatory notes with links to key sections or clauses in documents, a PDF reading experience, and full text searching across the entire range of documents. The app also features interactive diagrams, to guide you through the maze of legislation, regulation, Ministerial directions and ACCC decisions.

G+T Insights

A library of our TMT publications

MELBOURNE

Level 22101 Collins StreetMelbourne VIC 3000T +61 3 8656 3300F +61 3 8656 3400

PERTH

1202 Hay StreetWest Perth WA 6005T +61 8 9413 8400F +61 8 9413 8444

SYDNEY

Level 372 Park StreetSydney NSW 2000T +61 2 9263 4000F +61 2 9263 4111

+

www.gtlaw.com.au

CD Melbourne Congress: Gilbert + Tobin's Simon Muys

Technology

Transcript of CD Melbourne Congress: Gilbert + Tobin's Simon Muys