Telstra and TPG are rolling up their sleeves to take on Australia’s biggest consumer watchdog, after the telcos’ proposed network-sharing deal was rejected by regulators.
The Australian Competition and Consumer Commission (ACCC) has announced that it will not authorise a regional mobile network arrangement between the two providers, after determining that the deal would result in potentially negative changes to the telco market.
However, both TPG and Telstra will be appealing the decision. In a lodgement with the ASX, TPG stated that it is preparing a review application to the Australian Competition Tribunal, while Telstra also announced plans to formally appeal the ACCC’s ruling.
Telstra and TPG vow to fight ACCC
Despite Telstra and TPG arguing that an agreement would increase mobile network access in rural areas and offer customers in regional communities more choice, the ACCC found that any positive impacts of the deal would be short-term at best.
“While there are some benefits, it is our view that the proposed arrangements will likely lead to less competition in the longer term and leave Australian mobile users worse off over time, in terms of price and regional coverage,” ACCC Commissioner Liza Carver said.
“Any reduction in competition will have very wide-ranging impacts on customers, including higher prices and reduced quality and coverage.”
Telstra CEO Vicki Brady called the ACCC’s decision “disappointing”.
“This decision is a massive missed opportunity for the people, businesses and communities of regional Australia,” Ms Brady said.
“This innovative agreement will deliver real competition-driven benefits for regional Australia, something recognised by the ACCC in its determination.”
TPG Telecom Chief Executive Iñaki Berroeta also referred to the ruling as a “missed opportunity” for regional customers.
“If it had been authorised, the arrangement would have freed regional Australia from its current mobile duopoly, and the increased competition from TPG would have placed downward pressure on mobile pricing,” Mr Berroeta said.
We’ve decided not to authorise proposed regional mobile network arrangements between Telstra and TPG. The proposed arrangements will likely lead to less competition in the longer term and leave Australian mobile users worse off over time. https://t.co/oLkQ9c1td6 pic.twitter.com/oGnX6CuMtJ
— ACCC (@acccgovau) December 20, 2022
What was the Telstra/TPG network deal (and was it good for customers)?
Telstra and TPG Telecom first announced plans to enter a ten-year Multi-Operator Core Network (MOCN) partnership in January 2022, subject to ACCC approval. The billion-dollar agreement would allow each telco to share mobile assets and spectrum, particularly across regional areas where coverage is not as widespread.
The deal would allow Telstra to deploy its infrastructure on up to 169 TPG Telecom/Vodafone mobile sites, and receive access to TPG Telecom’s 4G and 5G spectrum holdings. In turn, TPG would gain access to around 3,700 of Telstra’s mobile network assets, increasing Vodafone coverage from 96% to 98.8% of the Australian population.
While TPG and Telstra talked up the network-sharing benefits for mobile customers, other industry bodies had publicly opposed the arrangement. Main competitor Optus argued that the partnership was akin to a merger that would result in a communications monopoly in regional Australia, and give Telstra even more power to control the mobile market.
Whether the ACCC’s decision is a win or loss for regional Australia may depend on whether you prioritise coverage over competition. A network-sharing arrangement would obviously strengthen Telstra and TPG/Vodafone’s presence in rural areas, as well as benefit other brands under the TPG Telecom umbrella, including Felix Mobile, Kogan Mobile, Lebara, and iiNet.
If improved coverage is extended to smaller telcos using Telstra or Vodafone’s mobile networks – known as Mobile Virtual Network Operators, or MVNOs – this could also lead to increased choice for regional customers.
Optus and competition celebrate decision
Naturally, Optus is celebrating the ACCC’s announcement. Optus Vice President of Regulatory and Public Affairs, Andrew Sheridan said that allowing the network sharing deal would “entrench Telstra’s dominance”.
“Such an outcome would leave Australians worse off with less choice, higher prices, poorer services and less communications infrastructure,” Mr Sheridan said.
“The ACCC’s decision is a great outcome for regional Australians and upholds three decades of policy designed to promote competition in telecommunications.”
Telco industry alliance Commpete also praised the ACCC.
“This decision is a well-considered and decisive move for competition, and the wholesale and retail mobile market at a national level,” Commpete Chair Michelle Lim said.
“In Commpete’s view, the proposal was primarily a commercial arrangement between two parties, and wasn’t the right one for competition.”
In contrast, Telstra said that it had received “overwhelming support” from regional customers and community groups who were involved in the ACCC’s consultation process. Charles Sturt University, the Canberra Chamber of Commerce, National Australia Bank and various councils had all expressed their support for the partnership.
“Despite today’s disappointing news, I’d like to thank all the people who recognised the benefits this agreement could bring and spoke up in favour of it,” Ms Brady said.
“We will keep pushing for the right outcome for you.”
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