Friday, 01 July 2022 10:57

Telstra-TPG deal: Budde urges overall review of mobile telco services Featured

Paul Budde: "Since deregulation some 30 years ago, regulations have been built around infrastructure-based competition." Paul Budde: "Since deregulation some 30 years ago, regulations have been built around infrastructure-based competition." Supplied

Australia should undertake a comprehensive review of its mobile telecommunications in the wake of Telstra's bid to actively promote the sharing of its infrastructure, independent telecommunications analyst Paul Budde has urged.

In a submission to the ACCC, which is examining the proposal prior to a decision on 17 October, Budde said prior to this, he had always argued for domestic roaming in regional areas because it did not make economic sense to overbuild mobile infrastructure.

The agreement between Telstra and TPG has three aspects in respect of a Multi-Operator Core Network commercial arrangement: a MOCN Service Agreement, a Spectrum Authorisation Agreement, and a Mobile Site Transition Agreement.

The ACCC says: "TPG would authorise Telstra to use spectrum which it currently owns, and Telstra would provide TPG with network services by way of active mobile network infrastructure sharing in certain regional and urban fringe areas (the Regional Coverage Zone), which comprise approximately 17% of the Australian population coverage.

"TPG will use the MOCN services supplied by Telstra to offer 4G and 5G retail and wholesale services in the Regional Coverage Zone. TPG will also transfer up to 169 of its existing mobile sites in the Regional Coverage Zone to Telstra, and intends to decommission the remainder. The initial term of the MOCN Service Agreement is 10 years and TPG has two options to extend the agreement by five years."

Due to the existing mobile situation, Budde said there was hardly any competition in regional areas. There was a "low level of mobile coverage, often lower levels of quality, no choice for consumers and potentially higher prices" but the  ACCC had failed to declare roaming in regional areas.

In view of Telstra having split its business into three major areas, of which two were now separate infrastructure businesses — one based on mobile and the other one of fixed networks — Budde said a complete review of mobile regulations was needed.

"Since deregulation some 30 years ago, regulations have been built around infrastructure-based competition. Regulation facilitated this and discouraged the sharing of infrastructure and sometimes actively prohibits it," he said in his submission.

"Now Telstra has changed this by actively promoting the sharing of their infrastructure with other players. It is therefore totally rational for players to use this opportunity to enhance their reach into the market through the new opportunities provided by Telstra.

"Thus, where the ACCC failed to make sharing possible, Telstra has made a 180-degree turn and is now offering such services voluntarily."

Budde said Telstra was not doing this out of the goodness of its heart. "Increased competition from the digital giants and also competition among the three main mobile operators forced Telstra to lower its costs and look for new revenue opportunities and hence its offerings in infrastructure wholesale services to its competitors, something it has violently opposed for many decades," he pointed out.0

"We would argue that these changes require a total review of mobile telecommunications regulations."

Budde added that in the mobile market, spectrum policy was based on ensuring new agreements would not lead to monopolisation.

"The deal clearly ends that policy as TPG would hand over its spectrum to Telstra. As TPG - under this new deal - doesn’t need the infrastructure in regional areas where Telstra has its own infrastructure, it will close down its own infrastructure," he said

"While mobile infrastructure competition in regional areas - for economic reasons - was already very weak, the deal would end that totally as also Optus has questioned its regional investments if the deal is allowed.

"This stops any competitive pressure on Telstra to extend its regional network and furthermore it will become the sole recipient of government subsidies provided under the Black Spot policy, where it is aiming to extend the mobile network into regional areas. This clearly means the end of infrastructure-based competition."

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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