Optus and Telstra sweep mobile blackspot program second round

Australia's two largest mobile telcos are set to build more than 100 new mobile sites each in the AU$60 million second round of the federal government's mobile blackspot program.

Absent from the previous AU$185 million round, Optus said on Thursday it would be building 114 new sites, and is set to outlay AU$36.4 million as a co-investment after gaining AU$26.4 million in federal and state government funding.

"Real investment in regional and remote telecommunications services is the only sustainable way to improve competition, and strength and breadth of coverage in regional Australia," Optus vice president of corporate and regulatory affairs David Epstein said. "Optus has embarked on an extensive regional network investment program and today's Mobile Black Spots announcement will supplement additional investment in regional telecommunications."

"In the last financial year we invested close to AU$1.6 billion in strengthening networks."

Optus said its bid included funding for 65 base stations and deploying 49 satellite small cells that the telco uses instead of mobile towers in remote areas.

At the same time, Telstra said it would build 148 3G/4G mobile base stations under this round of funding, after gaining funding at 429 sites in the last round.

"As the carrier with the nation's largest mobile footprint and the first to bring 4G mobile services to regional Australia, we know that increased coverage is the number one priority for people and businesses in regional Australia," Telstra group managing director Mike Wright said in a blog post.

"The program is encouraging providers to build mobile infrastructure in remote parts of Australia -- infrastructure such as towers and backhaul that all carriers can use to provide services to their customers if they choose to invest -- and that is a great outcome for people living and working in these communities."

After gaining funding for only four more further base stations, Vodafone took the opportunity to renew its call for domestic roaming to be declared by the Australian Competition and Consumer Commission (ACCC).

"Today's announcement is also a lost opportunity since Telstra has received 75 percent of sites under rounds one and two," Vodafone chief strategy officer Dan Lloyd said. "This clearly risks further entrenching the dominance of Telstra, unless the ACCC declares a wholesale domestic roaming service."

Under the terms of the blackspot program, telcos have to make sites available to competitors to use, but Lloyd said that while Vodafone would have half its sites shared, Telstra had not been helping the company when it looked to share the incumbent telco's towers build under the program.

"We remain an enthusiastic supporter of the program and its objectives to provide improved coverage and competition to regional and rural areas; however we do have concerns around the spirit of the program being upheld," he said.

"Extending and entrenching Telstra's regional dominance only raises higher and higher barriers to anyone else investing in regional infrastructure."

"Infrastructure-sharing is the only way to deliver competition to regional Australia, and to guarantee better choice, coverage, and investment."

In October, Telstra said the best way to get mobile coverage into uneconomic parts of Australia was through programs such as the blackspot program.

An audit completed by the Australian National Audit Office (ANAO) in September criticised several aspects of the program, and said the Department of Communications had erred in its selection criteria and ability to evaluate impact and cost effectiveness.

ANAO said the department's selection criteria allowed for the expansion and improvement of existing coverage, rather than providing coverage to areas with no mobile access; the department did not have methodologies for assessing the technical and financial aspects of proposals, especially in regards to applicant costings; and that the department did not have a sufficient capacity to assess the impact and cost effectiveness of the program, because there was no evaluation framework formed beforehand.

As a result of its report, ANAO made three recommendations, all of which the Department of Communications agreed to: Establishing minimum scores for assessment criteria of locations; implementing a detailed assessment methodology for choosing locations; and applying a framework for performance measurement.

The third round of blackspot funding is expected to commence in mid-2017.