Back in February, telco giants Telstra and TPG signed a deal that would see the duo team up to improve network coverage in regional Australia. It’s been four months since then, and a lot has been said about the plan.
The announcement came just days after the 2021 Regional Telecommunications Review was published, highlighting key problems throughout regional Australia’s telco infrastructure.
It was noted that the bushfires between 2019 and 2020 caused significant pressure for networks in regional Australia and that the pandemic put major pressure on the existing regional infrastructure.
As of June 30, the spectrum sharing plan is still under consideration by the ACCC. Submissions closed on June 14.
“The Applicants seek merger authorisation of the use by Telstra of spectrum held by TPG (pursuant to the Spectrum Authorisation Agreement), which is deemed by section 68A of the Radiocommunications Act 1992 (Cth) to be an acquisition for the purposes of section 50 of the Competition and Customer Act 2010 (Cth) (the Act),” the ACCC website reads.
So with Australia’s two biggest telcos collaborating in regional Australia, what can we expect?
The Telstra-TPG network sharing deal, explained
The deal is set to last for 10 years, dubbed the “Multi-Operate Core Network” (MOCN) commercial agreement. Telstra said it will provide wholesale customers with greater value while also giving TPG customers access to greater 4G and 5G services within regional Australia.
Under the deal, TPG will decommission 725 signal towers in areas already covered by Telstra’s network, although the company will get network access to 3,700 Telstra towers.
What this deal means for customers is that Telstra and TPG will share their networks and mobile network sites in regional Australia.
If the deal goes through, TPG’s 4G coverage of Australia is set to bounce from 96 per cent to about 98.8 per cent. Meanwhile, Telstra’s access to TPG’s infrastructure will increase available capacity to its customers, opening up Telstra’s user base to TPG’s 4G and 5G spectrums.
Both telcos will continue to operate their own networks individually, especially where key functionality differences between the companies exist (say, for example, differences in offered plans or in metropolitan area signals).
“This additional spectrum will mean that all Telstra customers will continue to experience Australia’s best and fastest network across the country, in combined 4G and 5G speeds,” Telstra’s outgoing CEO Andrew Penn said at the time.
“With more people moving to regional areas as a result of COVID, congestion in some areas has increased. This additional spectrum will also ensure that Telstra customers will experience significantly reduced congestion at busy times.”
Under the arrangement, Telstra will deploy additional infrastructure at up to 169 TPG Telecom sites, which would improve the network experience for both Telstra and TPG customers within signal range.
“We will be open for business in regional and rural Australia like never before, offering a 4G network that provides 98.8 per cent population coverage and rapidly growing 5G coverage across the nation,” added Iñaki Berroeta, TPG Telecom’s CEO.
“The agreement demonstrates best-practice asset utilisation and a commitment to rationalising our operations to deliver a better customer experience, while increasing capital efficiency.”
Criticisms to the deal
Both Optus and NBNco have criticised the network sharing plan.
Optus, the main competitor to both Telstra and TPG, sees it as a massive competition concern, saying that it could see a return to monopolisation in regional Australia (it has been saying this since the plan was announced). The telco believes the plan will lead to higher prices, lower investment, lower network quality, less consumer choice and less infrastructure resilience.
“The proposed network merger will not improve community or customer outcomes. If approved, it will have major adverse and irreversible consequences for the communications sector and ordinary Australians, especially those living in our regions,” Optus claims in its submission to the ACCC.
“It will strengthen Telstra, weaken Optus and the competitive pressure that Optus imposes on Telstra.”
But, of course, Optus stands to lose the most from this deal. Ultimately, Optus will need to compete with two network operators sharing resources instead of just two networks going forward. Optus’ managing director for enterprise, business and institutional operations, Gladys Berijiklian (former Premier of NSW), also posted a blog post against the plan.
Optus’ claims have been addressed by TPG in a statement made Thursday, with TPG saying they amount to “scaremongering”.
“TPG was surprised by the recent attempts by Optus and its leadership team to leverage the suffering of communities affected by bushfires and floods for social media stunts criticising the arrangement,” TPG said in the statement.
“Optus has engaged in scaremongering and rolled out its executives to trumpet the same lines regarding resiliency and future regional investment. This is an insult to regional mobile users who will benefit from the network sharing arrangement,” said James Rickards, TPG’s general manager of external affairs.
“It is a disappointment to our industry Optus chose to use emotionally manipulative images of kangaroos seeking to escape a bushfire, in an increasingly desperate attempt to stop a competition-enhancing arrangement. Such posts have been recognised by the Australian public for exactly what they are: misguided and inappropriate.”
NBN Co, on the other hand, is concerned about how the network sharing plan could impact their 5G spectrum for fixed wireless broadband services in regional Australia. NBN doesn’t have phone plans, but it does offer internet in regional Australia on the 5G spectrum.
“We submit that the ACCC’s assessment should consider Telstra’s ability to enjoy access to TPG’s spectrum for the proposed extensive duration and its impact on the primary market for spectrum (including as a result of its impact on relevant mobile markets),” NBN Co said in its submission.
Additionally, Aussie Broadband and Kogan have made submissions. Aussie isn’t entirely opposed to the network sharing plan, saying that it should be conditional on Telstra to provide open access to network/antenna sharing for potential carriers in the future.
Kogan is in favour of the network sharing plan, considering that it’s a Vodafone MVNO.
The MOCN deal is subject to regulatory approval and could kick off as early as this year. The ACCC is scheduled to make its decision by October 17, 2022.