AUSTRALIA’s second-tier telco, Vodafone, says the consumer watchdog’s lack of action on mobile roaming, following an inquiry that could have forced mobile networks to share coverage, is “inexplicable”.
The Australian Competition and Consumer Commission’s draft report on its inquiry into mobile roaming found that forcing telcos to share network coverage would not increase competition among telcos or push them into increased competition leading to greater network coverage.
Vodafone said it provided the ACCC with evidence that roaming boosted competition and coverage in six countries where it is in place.
Telstra is opposed to roaming, and forecast a sudden end to its investment to extend its regional network if it were forced to share it with other telcos.
“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,” the company said in a response to the ACCC’s determination today.
Vodafone’s director of corporate affairs Dan Lloyd said a scare campaign from Telstra appeared to have swayed the ACCC.
“Inexplicable is the word we’re using. We presented detailed evidence from six countries where roaming had worked,” he said.
“We had figures from before and after in the US, Canada, New Zealand, Spain, France and South Africa and it was all consistent - coverage and investment went up after roaming.”
Mr Lloyd said he cannot understand how the commission reached its decision in its third review, given its previous inquiry concluded regulation may be needed if the industry did not reach commercial agreements to share network coverage under roaming.
The divide between the cities and regional areas will remain, he said.
Roaming was needed to make competition viable for the rest of the industry, given Telstra’s historical advantage in regional coverage.
ACCC chairman Rod Sims said he understood why other telcos would be “irritated” by the head start Telstra got as a government monopoly on mobile network building. He also did not buy Telstra’s “scare campaign” that investment in network expansion would cease under roaming.
But roaming risked further investment “at the margins” of the network, where Telstra and Optus are engaged in healthy competition to extend their networks in certain rural and regional areas.
Mr Lloyd said Telstra received $2 billion in government subsidies and funding to build its regional networks, but it spends just $150 million a year on mobile networks in the bush.
Meanwhile, Telstra’s chief executive Andy Penn is on cloud nine with the ACCC’s draft determination.
He said the ACCC’s decision was “the right decision for the people, business and communities of regional Australia”.
“It means the telecommunications industry still has incentives to invest,” he said.
“No company invests money, technology and talent if ultimately it will be required to provide that to its competitors, especially those with their own capital and capacity to invest but have chosen not to do so.”
Upon the release of the ACCC’s final report, expected mid-way through this year, he will commit to expand Telstra’s 4G technology to meet 99 per cent of the population.
“[The decision] will also pave the way for ongoing investment in the coming years that will see an additional 1.4 million square kilometres of 4G coverage for regional and rural Australia - This means 600 base stations will be upgraded from 3G to 4G.”
He was confident the ACCC’s determination wouldn’t dramatically change from its draft form.
"I expect ultimately the final decision will be the same as what appears here in the draft but it’s appropriate the ACCC goes through the entire consultative process.”
A major part of the ACCC’s decision against mandating roaming was due its belief Telstra would introduce “location-based” pricing - meaning it would charge additional fees for users to roam onto another network.