‘Right decision, wrong reasons’: Why the Telstra-TPG deal needs work

The ACCC's decision might have prevented a stronger telco monopoly, but it's avoiding a bigger issue.

The ACCC's decision might have prevented a stronger telco monopoly, but it's avoiding a bigger issue. Photo: TND/Getty

Australia’s consumer watchdog has quashed a proposed partnership between two major telcos over fears for competition – but experts say more needs to be done to give regional communities better service.

On Wednesday, the Australian Competition and Consumer Commission announced it would not authorise a proposed deal between Telstra and TPG.

The partnership would have seen the companies use each other’s mobile network infrastructure in regional areas to provide better 4G and 5G services.

In response to the ACCC’s decision, Telstra and TPG immediately flagged their intention to file an application to the Australian Competition Tribunal for a review of the “extremely disappointing” decision.

ACCC hurting telco competition

Laurie Patton, former chief executive of Internet Australia and prominent NBN critic, told The New Daily while the Telstra-TPG proposal was problematic, the ACCC’s rationale for denying the proposition didn’t make sense.

When announcing its ruling, the ACCC said it wasn’t convinced the public benefits from the arrangement would outweigh likely detriments, or that the arrangement wouldn’t be likely to significantly lessen competition.

“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 in a statement.

But Mr Patton said Australia needs a system where telcos share basic infrastructure.

Currently, the ACCC’s “insistence” on 121 points of interconnect has “killed off” the prospect of increased consumer competition by forcing smaller internet service providers to subcontract access to the set number of points of interconnect, adding to costs and damaging market competition, he said.

NBN telcos

Laurie Patton says Australia needs a system where telcos share basic infrastructure. Photo: TND

Mr Patton, a former Seven Network executive, said the telco market should follow the example of regional television, in which numerous TV networks share transmission systems.

“You will not find anywhere in regional Queensland where the commercial television networks have put up their own transmission systems side by side. It makes no sense,” he said.

“It’s a fundamentally flawed proposition to expect multiple telcos to run side-by-side transmission systems across the vast expanses of rural Australia.”

And it is rural Australians with the most at stake when it comes to telco infrastructure set-up.

Shared infrastructure needed

A 2022 RMIT University report that analysed the state of mobile telecommunications in regional and remote Western Australia confirmed a ‘digital divide’ remains a factor that negatively affects the eight First Nations towns and communities included in the study.

The report’s chief investigator associate, RMIT University associate professor Mark Gregory, said the eight towns had less than 10 per cent of the upload and download speeds available to city dwellers.

He said the answer to the “woeful” results would be to encourage shared ‘neutral host’ infrastructure that would allow domestic roaming.

“Neutral host means that the infrastructure is installed by anyone, whether it be a telco or infrastructure provider, and they make available access to everyone on one tower with the one set of transmission equipment,” Dr Gregory said.

He said the lack of push for shared infrastructure and domestic roaming means Australia is lagging behind the rest of the world, including neighbouring New Zealand where the government is co-funding the rollout of shared neutral host infrastructure in regional and remote areas.

Dr Gregory said ACCC made the right decision about the Telstra-TPG deal for the wrong reasons.

Although a stronger Telstra monopoly should be avoided, the inclusion of other telcos such as Optus in the Telstra-TPG deal would be a step in the right direction to sharing infrastructure.

“That would be the best solution for people in regional and remote Australia,” he said.

For its part, Optus has called the ACCC’s ruling a win for competition in regional communities.

It will be some time before the results of Telstra and TPG’s review application are decided, but TPG has previously been successful in overturning an ACCC ruling, resulting in the telco’s 2020 merger with Vodafone Hutchison Australia – which the watchdog later blamed for soaring mobile plan prices.

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