Telstra: Domestic mobile roaming declaration would remove incentive for network investment

Telstra has said that a declaration of wholesale domestic mobile roaming by the Australian Competition and Consumer Commission (ACCC) would stymie competition and investment in regional and rural areas.

The ACCC on Monday announced the commencement of an inquiry, saying a declared roaming service would provide more choice for consumers by allowing telcos to piggyback off each other's infrastructure in rural areas to provide coverage in areas where they don't have their own mobile network.

In response, Telstra group executive for Corporate Affairs Tony Warren said declaring a domestic mobile roaming service would remove any incentive by telcos to invest across Australia, as they could simply use Telstra's investments to offer services to customers.

"Where there is lack of choice of operators for regional Australians, it is the result of decisions by our competitors to not invest in those areas," Warren argued.

"Declaring mobile roaming would stop coverage being a differentiator in the Australian market and, therefore, remove the key rationale for investment in regional Australia for all operators.

"Declaration would ensure there is no incentive for any operator to invest for competitive reasons in many regional areas."

According to ACCC Chairman Rod Sims, however, the regulator has received "significant interest" from groups including the Regional Telecommunications Review Committee, Infrastructure Australia, and the House of Representatives Agriculture Committee on making such a declaration.

The declaration inquiry will examine the changing nature of consumer demands for mobile services in regional and rural areas; telecommunications providers' existing plans to roll out coverage or upgrade technology and infrastructure in those areas; any "significant" barriers to mobile network expansion; similar situations in comparable countries; and whether declaring the service would actually lessen competition by dissuading telcos from investing in their own network coverage.

"Consumers are increasingly relying on mobile services, and the issue of coverage and a lack of choice in some regional areas is a particular issue that has been raised by a number of groups," Sims said.

"A particular area of concern for us is whether consumers would, in fact, be disadvantaged if the incentives to invest in expanding the reach of mobile networks were reduced."

Australia's mobile telecommunications providers have been investing in expanding coverage across the country of late, as has the federal government through its mobile blackspots program.

Under the first round of the program, Telstra and Vodafone Australia secured AU$185 million in government funding to build or upgrade 499 mobile towers across Australia. In total, Telstra will build out 429 cell towers while Vodafone builds out 70, with both telcos also adding their own funding to complete the program.

Telstra was also commissioned to install small cells in 135 small towns to provide 4G services where Telstra infrastructure is already available.

The government announced the second round of the program in early December last year, providing a further AU$60 million to those participating. At the end of May, the Coalition pledged to spend an additional AU$60 million to fund a third round of the mobile blackspot program to build or upgrade a further 900 mobile towers.

Additionally, Vodafone announced in May that it would be investing more than AU$9 million on constructing 32 new mobile base stations across the country to improve telecommunications coverage in regional areas.

Vodafone has also expanded its 4G network nationwide by purchasing AU$68 million worth of 1800MHz spectrum and refarming its 850MHz spectrum band to bring coverage to regional and metropolitan Queensland, New South Wales, and the Australian Capital Territory, and proposed to the to the Australian government that it be permitted to pay AU$594.3 million for 2x 10MHz in the 700MHz spectrum band that was unsold in the 2013 auction.

Vodafone's 4G network covers 95.3 percent of the Australian population, or 23 million people, while Telstra's reaches 98 percent of the population after upgrading more than 2,000 network sites to 4GX during FY16.

Optus last month announced that it would similarly be extending mobile coverage across 12 Northern Territory regions using small cells that leverage Optus' satellites rather than having to build out additional mobile towers in remote areas.

This is the ACCC's third inquiry into wholesale domestic mobile roaming regulation, after deciding not to proceed with declaring a service in 1998 and 2005.