There are likely to be “significant long-term implications” from effectively only allowing Australian telcos to choose between two vendors to provide equipment for their 5G rollouts, the CEO of Vodafone Hutchison Australia (VHA) has warned.
The Australian government last year told telcos not to use equipment provided by Huawei, leaving local mobile network carriers to choose between Nokia and Ericsson in order to roll out the next-generation cellular technology. Telstra has a long-standing partnership with Ericsson. Optus, which has used some Huawei gear in its 4G network, has opted for a multi-vendor approach.
“Network equipment is a critical input into a fast-moving industry,” local Vodafone chief Iñaki Berroeta today told the CommsDay Summit in Sydney. “Australia has now voluntarily, and well ahead of decisions in many other Western countries, submitted itself to a duopoly,” the telco CEO said.
“Even small differences in cost and innovation in critical inputs can have a profound long-term impact on the pace at which the industry can move. While we of course respect government decisions which are made as a result of national security concerns, the implications of this decision are substantial.”
Earlier this year Vodafone said it was still working on its 5G roadmap in the wake of the ban. The telco uses Huawei gear to help deliver 3G and 4G services.
Although not naming Telstra, Berroeta said that the Huawei ban had worked to the incumbent telco’s advantage.
“There is a very material impact on the industry, but one that is not being felt by the largest mobile operator” the CEO said.
That gives Telstra a “huge advantage going into 5G.”
“I need to point out that VHA, and Optus for that matter, are not being compensated for the substantially increased costs of this government decision,” he said.
“Whenever the incumbent has been impacted by a major government decision – most recently the NBN – it has been compensated. And I do wonder if compensation would have been involved if the incumbent had been negatively impacted by this ban.”
VHA is currently seeking to merge with TPG; however, the deal is still awaiting sign-off from the Australian Competition and Consumer Commission. The ACCC is currently expecting to hand down its decision on 9 May.
“The merged company would be the third full-service player with the scale to effectively compete in what is a highly distorted market with a unique set of challenges,” Berroeta said.
“It would give us the ability to drive stronger competition and boost investment, meaning consumers would benefit from cheaper prices, more bundling opportunities and faster deployment of infrastructure.”
The CEO said he was “hopeful of a positive outcome” from the ACCC process.