Telstra-TPG agreement highlights an ACCC failure

Mark Gregory

Last month, Telstra and TPG Telecom signed a ten-year mobile infrastructure sharing agreement that will boost TPG Telecom’s mobile network to cover 98.8 per cent of the population and generate about $1.6 billion in revenue for Telstra.

TPG Telecom will decommission 725 mobile towers in the areas covered by the agreement, and it will gain access to about 3700 Telstra mobile towers in regional and urban fringe locations. Telstra will gain access to 169 TPG Telecom mobile towers under the agreement.

Telecom tower troubles

The agreement also provides Telstra with access to TPG Telecom’s 4G and 5G spectrum. TPG Telecom has not indicated how much revenue, if any, will be derived from the spectrum sharing agreement.

If there is any single event that sums up the Australian Competition and Consumer Commission’s (ACCC) inability to fully understand the telecommunications market, it is this one.

The ACCC has consistently misread the telecommunications market and one bad decision has led to the next. The result has been inconsistency and a failure to provide the telecommunications industry with the certainty that is needed for the industry to move forward.

What is Optus to make of the agreement between Telstra and TPG Telecom?

Didn’t the spectrum auctions over the past decade or more limit the amount of spectrum that carriers could bid for? What a pointless exercise, if the carriers can simply share the spectrum through agreements such as the Telstra and TPG Telecom deal.

The spectrum auctions managed by the Australian Communications and Media Authority (ACMA) should be called out for what they are, an anti-competitive farce. If the goal of the auctions is to ensure that the big three Telcos have guaranteed income, then the Telstra – TPG Telecom agreement highlights that this was a success.

For no other reason than Telstra, Optus and TPG Telecom were limited in how much spectrum they could bid for, ensures income for all three, even if they do not build infrastructure to use the spectrum.

This brings me back to the ACCC’s decision in 2017 to not declare domestic mobile roaming. Despite strong argument that a declaration of domestic mobile roaming, particularly in regional and remote areas, would provide a significant improvement in mobile telecommunications, the ACCC was resolute in its flawed ideology.

In the five years since this decision was made, the rationale for the decision has been shown to flawed.

Now, the agreement between Telstra and TPG Telecom highlights why the ACCC needs a change in direction and people with a better understanding of the telecommunications market in leadership positions.

If Optus were to join this agreement in some form, we would have a defacto domestic mobile roaming outcome.

Rather than guide the telecommunications industry to ensure there was an equitable outcome that ensures competition between the carriers and the mobile virtual network operators (MVNO), the ACCC, by abrogating its role in this process, has left the market to its own devices and the result is not positive.

Whilst the Telstra and TPG Telecom agreement has positive elements, TPG Telecom does not gain access to all of Telstra’s mobile telecommunications infrastructure in regional and remote areas.

Optus is now facing a situation where TPG Telecom has gained an advantage in regional and remote areas. TPG Telecom can claim a far more competitive network coverage outcome without the infrastructure cost.

Over the past five years, Optus has been rolling out small cells into many communities and locations across regional and remote areas that have been without mobile coverage, and in many of these locations due to the small number of subscribers, Telstra has not bothered to install its own infrastructure.

The Victoria River roadhouse is one location where I’ve seen an apologetic sign that indicates that yes there is mobile coverage, and it is provided by Optus. This is not an unusual sight in locations where Optus has taken the initiative to install small cells and Telstra has not.

Let us remember, one of the ACCC’s reasons for not declaring domestic mobile roaming was its belief that by not doing so, both Optus and TPG Telecom would need to invest significant amounts into infrastructure in regional and remote areas.

The infrastructure spend in regional and remote areas by Optus and TPG Telecom over the past five years, after the government’s black spot funding is deducted, is nothing to shout about.

Mr Rod Sims, the outgoing ACCC Chair, told the Sydney Morning Herald of his concern that the agreement between Telstra and TPG Telecom could result in higher mobile plan prices.

If the ACCC had declared domestic mobile roaming in regional and remote areas back in 2017, it would have direct input into how the infrastructure sharing costs could be set, but it is too late now for Mr Sims to speak of his concerns.

It is disappointing that the ACCC has not taken ownership of its inability to understand the telecommunications market, particularly with regard to regional and remote areas.

The 2021 Regional Telecommunications Review report identified the need for domestic roaming in regional and remote areas at times when infrastructure is damaged as a result of natural disaster. This is an important recommendation that gets to the heart of the problem.

It is time for the ACCC to launch an inquiry into the agreement between Telstra and TPG Telecom and to relaunch the domestic mobile roaming declaration inquiry for regional and remote areas.

It should be anticipated that Optus is concerned by the turn of events and should be provided with an opportunity to have its say about both matters now that it finds itself in a very different position than it was a month ago.

Telecommunications is an essential service and thoughts of market competition and the ACCC’s flawed ideology must be put aside to ensure that people and business in regional and remote areas can communicate at all times.

Mark Gregory is an Associate Professor in the School of Engineering at RMIT University

Do you know more? Contact James Riley via Email.

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