The Infocomm Development Authority has issued an industry consultation paper on the Code of Practice for Competition in the provision of telecoms services that aims to address potential regulatory issues in the new NBN landscape.
The consultation paper, which is part of the second triennial review of the Code since its establishment in 2000, includes proposals from the IDA for the promotion of service based competition, as well as specific definitions of market dominance, procedures of ownership transitions, all issues that may impact existing and new players with the deployment of Singapore’s new broadband network.
Leading off the paper is a proposal to put more regulatory emphasis on service competition.
“Moving forward, IDA intends to modify its regulatory principles to give equal consideration to promoting services-based competition, especially in markets where facilities-based competition appears difficult, as a pragmatic solution towards achieving IDA’s overall objective of promoting effective and sustainable competition in the market,” the IDA said.
With the paper, the IDA is inviting views and comments on whether it should give equal consideration or take a more proactive approach in promoting services-based competition in markets where facilities-based competition (i.e. the building or replication of facilities) has proven difficult or infeasible, and suggestions on the means by which this could be done.
The direction is consistent with the government’s NBN strategy of appointing a NetCo and an OpCo to build, maintain and run the network while the rest of the industry competes with services on top of the infrastructure. While there is no guarantee that the model will be effective in promoting competition on the services level, what it does promise is a level playing field, especially for new players.
NON DOMINANT ACT: That brings the consultation paper to its next point – redefining the market dominant status of players, something that will be harder to gauge given the natural, and regulated, monopoly of the NBN. According to the IDA, the current Code only provides that a licensee classified by IDA as being dominant can be found to have engaged in an abuse of dominant position.
“IDA notes that this approach has caused considerable concern in the industry, which is unintended. In review, IDA considers that the application of the safeguards in Sub-section 8.2 against the abuse of dominant position should apply to any entity which is assessed to have Significant Market Power,” the consultation paper said. “IDA thus proposes to revise Sub-section 8.2 of the Code to provide that all Licensees are subject to the prohibitions against abuse of dominant position, regardless of whether IDA has already classified the Licensee as a Dominant Licensee. This means that if a non-Dominant Licensee is determined, during an investigation, to have Significant Market Power, and to have engaged in conduct that constitutes an abuse of that market power, IDA can take appropriate enforcement action.”
Since anyone can now be deemed to have Singapore market power, a player that is currently considered a dominant licensee would not be able, or need, to apply for exemption from specific sectors, which is the practice now. The IDA added that existing exemptions granted to SingTel in a small number of markets will not apply in the new scheme.
In this kind of scenario, any player that is more successful than their peers by a wide margin – for example, a player with a service offering that gains significant market share – will immediately come under more regulatory scrutiny than their peers.
Lastly, the IDA also proposes more detail reporting of any transactions of ownership between licensees. While all transactions of ownership interest already have to be declared to the IDA, the new proposal now requires companies to submit a chart detailing the relationship between each applicant and its affiliates and the relevant ownership interests of the parties, among other conditions.
Submissions to the consultation are due before 12 noon on Wednesday, 10 December 2008.
Tony Chan
