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ACCC decides against wholesale domestic mobile roaming

After an intense debate between Telstra and Vodafone on declaring wholesale domestic mobile roaming, the ACCC has decided there is already effective competition in Australia's mobile market.

Wholesale domestic mobile roaming will not be declared under a draft decision by the Australian Competition and Consumer Commission (ACCC), which decided that there is already "reasonably effective competition" in the national retail mobile services market without additional infrastructure sharing.

"The ACCC has insufficient evidence that declaration will improve the current state of competition overall," ACCC Chairman Rod Sims said.

"We are extremely conscious of the fact that in regional, rural, and remote areas, 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. While declaration may deliver choice for more consumers, declaration has the potential to make some consumers worse off."

Despite acknowledging that incumbent operator Telstra has an advantage in regional areas, the regulator said this alone is "not sufficient to justify declaration of a roaming service".

This was partially due to the finding that mobile pricing does not differ geographically, meaning regional consumers are benefiting from effective competition in urban areas.

"Australians benefit from high-quality mobile networks while paying retail prices below the OECD average," the ACCC's Domestic mobile roaming declaration inquiry: Draft Decision [PDF], published on Friday, said.

"While some of Telstra's prices are higher than those of its competitors, we have found that effective competition in the national market still constrains Telstra's pricing."

Vodafone Australia -- the telecommunications carrier with the least network coverage across rural and remote Australia that has accordingly constantly argued in favour of domestic roaming -- called the ACCC's decision a "missed opportunity" for those living in regional areas who it said will remain "hostage to Telstra".

"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," Vodafone said.

"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.

"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."

However, the ACCC took Telstra's view that a regulatory declaration of wholesale mobile domestic roaming would result in less investment by Telstra in regional areas, as it would remove the incentive by allowing Vodafone to piggyback off Telstra's mobile infrastructure.

"While declaration would improve Optus' and VHA's ability to compete with Telstra on the basis of network coverage, there is insufficient evidence to suggest that this would have a significant impact on overall competition in the national retail mobile services market," the ACCC's draft decision said.

"Importantly, declaration of a roaming service would be likely to significantly reduce the benefits a mobile network operator would experience from extending its network coverage beyond that of its rivals."

Vodafone Australia CEO Inaki Berroeta had previously said Telstra's arguments against domestic roaming were "bordering on hysterical".

"Contrary to what some will have you believe, the sky won't fall in," he said at the end of last year.

"I have to say, I am puzzled as to why the incumbent's infrastructure is seen by some as somehow sacred."

Telstra, Optus, and Vodafone Australia have been debating the matter since the ACCC announced its investigation last month, with Telstra immediately saying that such a program would stymie competition and investment in regional and rural areas.

The ACCC then published its discussion paper in October. It is accepting submissions on its draft decision until June 2.