With the ACCC's final decision on wholesale domestic mobile roaming due within weeks, the debate between telecommunications providers on what it will mean for rural mobile users continues as Vodafone presses the issue in Federal Court.
A declaration of wholesale mobile domestic roaming would allow carriers to utilise each other's existing mobile towers in areas where they do not have coverage at a government-mandated price.
Telstra, Optus, and Vodafone Australia have relentlessly debated the matter since the ACCC first announced its inquiry last year, arguing over whether sharing infrastructure would decrease competition and stymie investment in regional and rural areas.
The decision so far
According to the ACCC, a declaration of mobile domestic roaming would reduce competition and regional spending.
There is "reasonably effective competition" already present in the national retail mobile services market without additional infrastructure sharing, the regulator's draft decision in May said.
"The ACCC has insufficient evidence that declaration will improve the current state of competition overall," ACCC Chairman Rod Sims said.
"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."
Acknowledging that incumbent operator Telstra has an advantage in regional areas, the regulator said it is still "not sufficient to justify declaration of a roaming service", partially due to its 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 Domestic mobile roaming declaration inquiry: Draft Decision [PDF] 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."
The ACCC said a declaration 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 instead of building its own.
"While declaration would improve Optus' and Vodafone'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: Domestic roaming will improve competition
Vodafone -- the telecommunications carrier with the least network coverage across rural and remote Australia that has accordingly argued in favour of domestic roaming -- called the draft decision a "missed opportunity" for those living in regional areas, who it said will remain "hostage to Telstra".
"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," a Vodafone spokesperson told ZDNet earlier this year.
"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 Australia CEO Inaki Berroeta had previously said that 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 in late 2016.
"I have to say, I am puzzled as to why the incumbent's infrastructure is seen by some as somehow sacred."
Vodafone Australia chief strategy officer Dan Lloyd had likewise labelled remarks that domestic roaming would remove incentives to invest in network expansion as being "cavalier" and unsubstantiated by evidence.
"Mandated national roaming is very common in countries with similar geographic and economic characteristics -- large land area, low population density," Lloyd pointed out.
"There's no evidence on the track record in the many countries that introduced it that it has a significant negative impact on investment, and, in fact, particularly out of France and the US, there's evidence that it in fact unlocks incentives to invest, and drives the industry in a positive direction."
Telstra and Optus: Domestic roaming will reduce incentive to spend
According to Telstra, a mobile roaming declaration would upset the dynamic in the regional Australian market, wherein the revenue made in highly competitive urban areas allows telcos to build out coverage to uneconomic areas.
"That unique dynamic ... sees competition in the cities drive coverage investment in the bush," Telstra group director of Corporate Affairs Tony Warren said late last year.
"These policy debates, if we get them wrong, will kneecap the regional investment needed to continue to expand these networks."
Around 15 percent of Telstra's mobile access network investments have gone to serve the most remote 2 percent of the Australian population over the last 10 years -- and Vodafone should have followed suit, Warren said.
"The lack of choice for a very small percentage of the population is simply a function of an extremely large multinational like Vodafone deciding not to invest in regional networks," Warren argued.
"I guarantee that should the ACCC do as it should and rule out roaming, Vodafone will have to invest, either through building its own towers or more likely collocating antennas on existing towers and using regulated backhaul. This has got to be the best outcome for rural and regional Australia."
Former vice president of Optus Corporate and Regulatory Affairs David Epstein said a multinational company should not be so "loathe to invest" in its own regional network.
"Vodafone Hutchison Australia in various guises has been operating for around 20 years in Australia, so it can hardly be classified as a new entrant," Epstein said in October.
As a demonstration of how domestic roaming not being declared would lead to further investment, Telstra CEO Andy Penn said the telco would "immediately" move to expand its 4G network to 99 percent of the Australian population upon the ACCC's final decision.
"If this decision is confirmed, I look forward to Telstra getting on with the job of supporting regional Australia with even more investment," Penn told media in May.
Optus similarly announced that it would be investing AU$1.5 billion in improving its mobile coverage throughout Australia as a result of the decision.
"The AU$1.5 billion primarily will go towards our mobile network, and will go towards building a significant number of new greenfields sites primarily in the regional areas," Optus CEO Allen Lew told ZDNet.
What have other carriers said?
Agreeing with Vodafone that domestic roaming would improve competition were TPG, the Competitive Carriers Coalition (CCC) made up of Australia's non-dominant telcos, virtual mobile service provider MNF, and mobile network provider Pivotel, which all criticised the ACCC's draft decision.
TPG, which is currently building out a AU$1.9 billion mobile network to be launched in some metro areas by mid-2018, but for now wholesales Vodafone's network, pointed towards the "very significant barriers to entry into the market for mobile telecommunications services" and said it was surprised the competition regulator was not supporting competition.
"TPG has already jumped one of the large barriers to entry into the mobile market and expects to be a very successful and innovative competitor," Tony Moffatt, TPG general counsel, said.
"As a result of the draft decision, some consumers may just have to live without the benefits of our competitive force."
The CCC said the decision to continue doing nothing to change Telstra's monopoly over regional Australia is "insanity", saying the regulator has "lacked the courage" to fix it.
"The decision is not a surprise, as the current legislative and regulatory environment in Australia is weighted against consumer choice and innovation in the telco sector," MNF CEO Rene Sugo added.
"MNF are waiting on the minister for communications to unblock our virtual mobile number service, and he should act on it urgently given the lack of choice in roaming for retail consumers, especially those in the bush."
Pivotel, which is currently building out 4G towers that utilise satellite capacity, said the decision was a "substantial missed opportunity" to increase competition and mobile networks throughout Australia, and to advance the Internet of Things (IoT) wireless industry.
However, the Australian Communications Consumer Action Network (ACCAN), which represents the telecommunications needs of regional Australians, stated that there is no evidence backing up Vodafone's claims that declaring roaming would increase competition.
"Consumers and small businesses in regional, rural, and remote areas want additional coverage where they live, work, and travel. It's unclear whether declaring domestic mobile roaming would achieve this," said ACCAN CEO Teresa Corbin.
"The existing mobile networks need to be upgraded to improve capacity and reduce congestion. Enhancements to mobile networks would go a long way in improving the daily lives of non-metro consumers and ensuring access to emergency services."
Vodafone v ACCC: The Federal Court process
Vodafone launched judicial review proceedings in June against the ACCC, saying its inquiry process was "flawed" as it did not properly define eligible services, leaving the matter too "vague".
"We do not believe the process has been carried out properly, because a specific domestic roaming service has not been defined by the ACCC. The process is failing consumers because it is too vague," Vodafone said.
"The decision on domestic roaming is too important to regional Australia for the inquiry to continue in a flawed way."
During the hearing in September, Vodafone counsel Noel Hutley SC argued that the ACCC had "failed to conduct the inquiry lawfully", and that by publishing its draft decision and threatening to publish its final decision, it is failing to act in accordance with the law.
Vodafone's arguments hinged on the allegation that the ACCC did not follow the correct legal process set out under Part 25 of the Telecommunications Act and Section 152AL(3) of the Competition and Consumer Act by not properly describing the service it was proposing to declare, and therefore not allowing Vodafone to make a meaningful submission.
According to Vodafone, a service description for a domestic mobile roaming service should define the geographical and technological scope, including whether it is 3G, 4G, data, or voice only. Defining the service prior to conducting the inquiry is "fundamental to the process", Vodafone said.
"There must be the identification of a specified eligible service ... before [the inquiry] commences," Hutley argued.
The ACCC -- along with Telstra and Optus, which joined proceedings as the second respondent and an intervener, respectively, as they said they would be affected by the decision -- argued that the law says nothing about a definition needing to be set at the beginning of the inquiry process.
A definition "can be developed" during the inquiry instead, counsel for Telstra Alan Archibald QC said, adding that the regulator would be "depriving the public" of the benefits of a public inquiry if exact specifications were demanded at the beginning of the process.
"Vodafone fails to establish any foundation for its contention of unlawfulness," Archibald argued.
The QC also refuted Vodafone's claim of being denied natural justice, saying that while Vodafone could not directly address the ACCC's specification, because it wasn't provided until the draft declaration was made, it did address its own preferred meaning of eligible service "at length" and made "comprehensive submissions" on all aspects of the inquiry.
"They did not suffer from lack of a target," Archibald argued.
"They without impairment provided their version of the appropriate declaration."
Hutley called the argument that specificity can be developed during the inquiry "absurd", pointing out that the aim of the exercise is to allow all interested parties to address the matter fully.
"We're asking for interested parties to be given a chance to make submissions on that which is being declared," Hutley said. "You can't move that goalpost without in effect starting again."
Where to now?
Vodafone is seeking the ACCC's draft decision to be either quashed by writ or treated as non-existent by court order. The court could also find that the regulator is not conducting a declaration inquiry, meaning the ACCC would have to start the process again.
Despite these potential outcomes, the ACCC still intends to publish its final decision between mid and late October.
Griffiths J has reserved his judgment, leaving the wholesale domestic mobile roaming issue tied up in complex court arguments.
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