The Australian Competition and Consumer Commission has ruled against a wholesale domestic mobile roaming service – which would allow rival telcos to roam using Telstra’s network – stating there was “insufficient evidence” a declaration on the service would improve the current state of competition.
It is a move both Vodafone and Pivotel have called a “missed opportunity” for regional Australians who are currently solely reliant on Telstra for their telecommunications needs.
Chairman Rod Sims said the ACCC is “extremely conscious” of the issues facing those in regional, rural and remote areas – such as mobile coverage and choice of service provider are vital issues.
“However, the effect declaration would have on competition in regional, rural and remote areas is uncertain,” said Simms. “While declaration may deliver choice for more consumers, declaration has the potential to make some consumers worse off.”
The ACCC inquiry into whether to declare a wholesale domestic mobile roaming service began in September 2016, and the ACCC had to consider whether declaration would “promote competition in relevant markets, achieve any-to-any connectivity and encourage the efficient use of, and investment in, infrastructure”.
The ACCC commenced public consultation in October 2016.
“The ACCC’s disappointing draft decision on mobile domestic roaming is a missed opportunity for regional Australia,” said Vodafone’s Chief Strategy Officer Dan Lloyd. “It denies the benefits of increased coverage, competition and choice to Australian mobile customers, especially hundreds of thousands of Australians living in regional and rural areas.”
Lloyd says “too many Australians will continue to be held hostage to Telstra, and will have no choice but to pay Telstra’s mobile premium which totals $1.4 billion per year”. Since 2006, Vodafone says, Telstra has received around $2 billion in government subsidies and funding to build its regional networks – yet it only spends $150 million per year on mobile in regional areas.
“The telecommunications divide between the cities and regional areas will only continue to widen, as no other operator will be able to close the coverage gap between Telstra and the rest of the industry,” Lloyd warns.
Simms said regional consumers benefit “to some extent” from price competition in metropolitan areas due to consistent pricing across Australia “despite the higher costs in servicing regional areas”. Simms also pointed to competition between operators on network investment as a benefit to regional consumers.
“There is insufficient evidence to suggest that declaration of a mobile roaming service in regional and rural areas would further lower prices or improve services, given the higher costs in servicing these areas,” Mr Sims said.
The ACCC says its draft decision states that “declaration in regional, rural and remote areas may not reduce Telstra’s retail mobile prices to a significant extent and could well result in overall higher prices if other service providers raise their retail prices to reflect the cost of roaming access prices.”
Pivotel CEO Peter Bolger said he sees this decision as “a missed opportunity to increase competition and a missed opportunity to increase investment in the emerging wireless internet of things industry.”
“It certainly cements Telstra’s monopoly position in rural Australia.”
The ACCC says it looked at the incentives for mobile network operators to upgrade their networks, or invest in expanding coverage both with and without declaration.
“We heard from many regional groups concerned about coverage. We consider there is evidence that declaration could damage some incentives for operators to invest such that overall coverage is not likely to improve with declaration,” Mr Sims said.
Simms said many regional consumers do not have a choice of provider either because they only have one network offering coverage in their region, or because they need continuous coverage.
“While we do not think that mandated roaming is the answer to these problems in regional and rural areas, we are seeking comment on other regulatory and policy measures that could improve coverage and competitive outcomes.”
Lloyd says in the wake of this decision, Telstra “will continue to receive a disproportionate share of taxpayer subsidies, and initiatives such as the Mobile Black Spot Program will not be able to realise their full potential”.
Lloyd pointed to the “extensive evidence and data” Vodafone and other telcos put forward to support the case, calling it “compelling”.
“Vodafone and several other companies committed to increased regional investment if roaming was implemented.,” Lloyd said. “It is disappointing for Australian consumers that a scare campaign with no facts or substance has succeeded.”
The ACCC concluded its statement by inviting “a broad range of stakeholders” to weigh in on today’s decision, saying it would “carefully consider all feedback before making our final decision in mid-2017.”