Telstra’s regional dominance set to continue

Forcing telco to open up its mobile network to competitors may make some consumers worse off, competition watchdog says

The Australian Competition and Consumer Commission will not declare a wholesale mobile roaming service under a draft decision released by the organisation this morning.

A decision to declare a service could force Telstra to open up its mobile network to competitors — potentially allowing rival mobile network operators such as Vodafone or TPG to piggy-back off the telco’s significant infrastructure investment in regional Australia.

The ACCC launched its inquiry in September last year. It was the organisation’s third inquiry into the issue. Vodafone agitated for the ACCC to regulate roaming while Optus warned that it could potenitally undermine the incentive for telcos to invest in infrastructure.

Telstra repeatedly warned that the decision would have a negative impact on rural Australians.

“Over many years Telstra has invested heavily in regional Australia,” Telstra CEO Andrew Penn said earlier this year. “We will continue to do so if the current regulatory settings remain in place.”

A decision to impose regulated roaming would remove the business case for Telstra’s investment in regional areas, the CEO said.

The ACCC said today that a decision to declare a roaming service would have uncertain impacts.

“The ACCC has insufficient evidence that declaration will improve the current state of competition overall,” its chairperson, Rod Sims, said.

“We are extremely conscious of the fact that in regional, rural and remote areas, mobile coverage and choice of service provider are vital issues. However, the effect declaration would have on competition in regional, rural and remote areas is uncertain.

“While declaration may deliver choice for more consumers, declaration has the potential to make some consumers worse off.”

People in regional areas benefit somewhat from competition in metro areas, Sims said, because telcos price their services consistently across Australia.

Vodafone said it was disappointed about the draft decision.

“It denies the benefits of increased coverage, competition and choice to Australian mobile customers, especially hundreds of thousands of Australians living in regional and rural areas,” the telco said in a statement.

“Too many Australians will continue to be held hostage to Telstra, and will have no choice but to pay Telstra’s mobile premium which totals $1.4 billion per year. Since 2006, Telstra has received around $2 billion in government subsidies and funding to build its regional networks, yet it only spends $150 million per year on mobile in regional areas.”

Vodafone said it “struggled to understand” how the ACCC reached its conclusions.

“The extensive evidence and data put forward by Vodafone and many others to support the case was compelling,” the telco said.

“Vodafone and several other companies committed to increased regional investment if roaming was implemented. It is disappointing for Australian consumers that a scare campaign with no facts or substance has succeeded.

“Monopolies don’t drive investment, competition does. Without domestic roaming, the opportunities for investment in areas where it is uneconomical to build more than one network are very limited.”

Telstra is expected to release a statement to the ASX shortly. TPG and Optus have been approached for comment.

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Tags Australian Competition and Consumer Commission (ACCC)mobile roamingTPGVodafoneoptusTelecommunicationsTelstra

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