Telstra put up 'significant barriers' for blackspot collocation: Vodafone

Vodafone Australia has said that while it wished to collocate on more than 100 of Telstra's base stations under round one of the federal government's mobile blackspot program, it was unable to do so thanks to cost and technical barriers imposed by the incumbent.

"We approached collocation in the spirit of the program, enthusiastically offering to share our sites with other operators as per the program guidelines," a Vodafone spokesperson told ZDNet.

"As a result, more than 60 percent of our sites under round one accommodate another operator. Unfortunately, this was not our experience when seeking collocation."

According to the company, while it submitted expressions of interest to collocate on around 100 of Telstra's round one base stations, it was unable to do so after negotiations with Telstra.

"We encountered significant barriers, from both a cost and technical perspective. As a result, only 4 percent of Telstra's round one sites include collocation," it said.

"We endorse and support the mobile blackspot program. However, we believe that it needs to be substantially improved for future rounds to deliver better outcomes for regional Australia. These concerns have been raised with government."

Vodafone explained in a submission to the Australian Competition and Consumer Commission that Telstra had raised barriers in terms of both costs and not providing sufficient space for potential collocated carriers.

"Contrary to the spirit and letter of the program's guidelines, Telstra negotiated a specification for collocation space on its towers which was substantially less than the minimum required for the standard space and weight requirements of collocation seekers," Vodafone's submission [PDF] said.

"Telstra also insisted on standard collocation pricing despite having received substantial subsidies (~50 percent) for the capital costs of building the base stations. This results in high barriers to entry, substantial additional subsidies to Telstra, and a frustration of the intent of both the mobile blackspot program and the facilities access regime."

While the mobile blackspot program guidelines do not require base stations to be constructed for collocation unless carriers express interest in collocating on them, the government built several provisions encouraging collocation into its round one agreements.

The provisions included awarding proposed base stations points when they could support a collocating carrier and mandating that carriers must provide sufficient power and space to support collocating carriers and their equipment, only charge collocating carriers incremental costs, and offer collocating carriers a discounted backhaul service where possible.

These provisions were then improved under round two, including via an option given to collocating carriers to request and pay the incremental cost for a greenfield base station to be built in cases where it is not feasible to collocate on a brownfield base station; mandating that carriers provide collocating carriers with backhaul of a minimum capacity equal to their own backhaul service where technically possible; and ensuring that collocating carriers are provided with microwave backhaul services as well as fibre.

Telstra did not respond to a request for comment by the time of publication.

Vodafone's comments came in response to the publication earlier this week of the Department of Communications' response to a Senate Estimates Questions on Notice saying Vodafone did not intend to collocate on any of Telstra's round one base stations.

"As at 11 April 2017, Vodafone is not intending to collocate on any of the mobile blackspot program round 1 Telstra base stations. This may change over the life of the program," the department told Senate Estimates.

Vodafone is allowing carriers to collocate on 43 of its own 70 round one blackspot base stations, the department added, although this number could also increase or decrease during the life of the program.

Under round one of the mobile blackspot program, which provided AU$185 million in funding to Telstra and Vodafone, Telstra is building out 429 base stations while Vodafone builds out 70. Telstra was also commissioned to install 135 small cells in order to provide 4G services where its mobile infrastructure is already available.

Under round two of the program, Optus will be building 114 new mobile sites while Telstra is responsible for 148 and Vodafone will build just four.

Vodafone 'gained market share over Telstra'

Vodafone has also disputed a recent report from market research company Kantar that it lost mobile market share across both prepaid and post-paid segments, saying it is continuing to gain more customers -- and is gaining market share over Telstra.

"Vodafone's customer base has been growing steadily since 2014. If you look at the data that is available, Vodafone's post-paid base grew 3.2 percent in the 12 months to December 2016, while Telstra's grew 2.3 percent, meaning Vodafone gained market share over Telstra," a Vodafone spokesperson told ZDNet.

Last week, Kantar had reported Telstra increasing its mobile market share to a total of 41.4 percent, while its post-paid market share grew by 2 percentage points to 42.8 percent and prepaid fell by 2.8 percentage points down to 38.9 percent of the market.

According to Kantar, Vodafone Hutchison Australia (VHA) -- which includes stats from Vodafone, Crazy Johns, and 3 -- fell from holding 15.3 percent of total mobile market share this time last year to 13.9 percent as of March 31 this year. It lost market share across both post-paid and prepaid, from 15.8 percent down to 13.7 percent and 14.3 percent to 14.2 percent, respectively.

"Within the post-paid market, VHA suffers share loss, with customers churning primarily to Telstra," Kantar said in its report.

"Telstra share up 2.0ppts vs last year, with VHA and other MVNOs the largest source of its customer gain -- these customers are joining Telstra on a post-paid tariff to get 'better network coverage' and 'better customer service'."

Vodafone, which told ZDNet that there is no way of validating Kantar's market share figures since customer base numbers have not been released by either Telstra or Vodafone for that quarter, last reported its customer base as having gained 125,000 customers over the full year to December 31.

As of the end of December, Vodafone's post-paid customers totalled 3.35 million, while prepaid customers numbered 1.65 million and MVNO customers reached 556,000, for a total network customer base of 5.56 million.

"The growth in our customer base was driven by the post-paid segment, with consumers attracted to our customer-friendly propositions such as AU$5 Roaming and AU$0 Roaming to NZ, and Red plan products," Vodafone Australia CFO James Marsh said in February.

Telstra's retail mobile customers as of the end of December numbered 17.4 million, having made gains of 200,000 customers, 79,000 of which were post-paid customers, over the half year.

In response to Kantar's report that Telstra gained customers from Vodafone due to its better network coverage, Vodafone said Telstra's wider-reaching network is "no secret", and is due to government subsidies via the Universal Services Obligation (USO), mobile blackspots funding, and National Broadband Network (NBN) payments.

"Telstra receives AU$3 million of subsidies every day, and it benefits from legacy government infrastructure, so its coverage advantage in regional areas is no secret," the Vodafone spokesperson told ZDNet.

"Its monopoly coverage area currently spans 1.4 million square kilometres, and without domestic roaming, that's only going to get bigger."

The federal government's decision earlier this month not to declare wholesale mobile domestic roaming will prevent Vodafone, which has the least network coverage of the three major telcos across rural and remote Australia, from piggybacking off Telstra's mobile infrastructure.

"We know that many customers value coverage, and unless domestic roaming is declared, allowing all customers to access the infrastructure they paid for through taxes, too many will continue to be held prisoner to Telstra," the spokesperson added.

While Telstra said it does not comment on market share surveys, it pointed towards CEO Andy Penn's recent statements refuting claims that Telstra receives government subsidies.

"Telstra receives no subsidies from the government. Let me repeat that: We have received no subsidies from the government. We have participated in the government's mobile blackspots program, which is a co-investment program, and we've put our money alongside the government's to provide better coverage to regional Australia," Penn said.

"The mobile blackspots program is a program that is available to all operators, and all operators have invested in it."