Figure 2.5 Telstra and access seeker DSLAM coverage

Source: ACCC Telstra Customer Access Network RKR.³⁸

Notes: The figures above refer to the percentage of exchange service areas with a DSLAM presence by Telstra and access seekers, rather than the number of services in operation or service providers. It does not account for how many DSLAMs each access seeker has in a particular exchange service area.

As shown in figure 2.5, Telstra continues to have the most extensive DSLAM presence and therefore the ability to offer DSL services over the largest geographic footprint. Both Telstra and access seekers have DSLAM equipment installed in all Band 1 (CBD) and most Band 2 (metropolitan) exchange service areas. Telstra has much more extensive coverage in Band 3 (regional and rural areas) and Band 4 (remote areas with a small population).

Access seekers tend to invest mainly in Bands 1 and 2 due to the higher number of potential customers and lower backhaul costs. By deploying their own infrastructure, access seekers are able to exert greater price pressure and offer a more innovative service than when they are reselling Telstra’s wholesale services. Following steady expansion of DSLAM footprints, end‑users in over 80 per cent of Band 2 exchange service areas are now able to access services provided over access seekers’ own infrastructure.

However, access seekers note that ULLS is not always the most efficient or viable form of market entry for all geographic areas.³⁹ Outside of metropolitan areas, competition in the downstream market is more reliant on access to the regulated wholesale resale services. Access seekers may be limited in their ability to compete in the Band 3 and 4 areas because of the costs involved in investing in DSLAM equipment and the limited ability to recover these costs, the lower number of end‑users, and the lack of scale compared to Telstra’s ubiquitous network (with largely sunk costs).

Fixed voice services (or landline voice services) are those provided over a dedicated access line on a fixed network, plus the provision of various calling functions. These include line rental, local calls, national long-distance calls, international calls and calls from fixed line phones to mobiles.

Source: Data obtained from the ACCC Division 12 RKR for named carriers and from the ACMA Communications Report 2013−14 for the ‘other’ category.

Notes: Market share calculations are based on the number of subscribers.⁴¹

Totals do not add up to 100 per cent in all years due to rounding.

There are four internet service providers (ISPs) with greater than 10 per cent market share operating in the retail market for fixed broadband services in Australia—Telstra, iiNet, Optus and TPG. Figure 2.7 shows that together, these four providers accounted for more than 82 per cent of fixed broadband (DSL and HFC cable) subscribers as at June 2014.

Source: ACCC Division 12 RKR & ABS, Internet Activity Australia (8153.0), June 2014.

There was a low level of consolidation activity over the period, with the key transaction in the residential retail market being the completion of the iiNet acquisition of Adam Internet in August 2013.⁴³ TPG also acquired the assets of Telecom New Zealand Australia Pty Ltd during the year. This acquisition comprised mainly transmission and data centre infrastructure of the AAPT and Powertel businesses as well as their corporate and wholesale services.⁴⁴

The use of ULLS to supply fixed line services continues to grow

While retail market shares are an important measure of competition, the degree of competition in the market for fixed line services also depends on how those services are supplied. Until the rollout of the NBN is complete, the majority of fixed line services will continue to be supplied over Telstra’s copper customer access network.⁴⁵

Telstra’s customer access network is used by Telstra to provide retail telephone services directly to customers. Telstra also provides wholesale telephone services to other retail service providers, or allows them direct access to the copper line so that they can install their own equipment and provide voice and internet services (via the ULLS and LSS). Table 2.2 shows the proportion of each type of service used to provide retail voice services over Telstra’s copper network.