Telstra to 'immediately' expand 4G network if ACCC draft decision holds

While Australia's smaller telcos have said the ACCC's decision will 'trap' consumers, Telstra has confirmed that it will expand its 4G network to 99 percent of the population if the draft decision holds.
Written by Corinne Reichert, Contributor

Telstra CEO Andrew Penn has said Telstra will "immediately" move to expand its 4G network to 99 percent of the Australian population should the Australian Competition and Consumer Commission (ACCC) confirm its draft decision not to declare wholesale domestic mobile roaming.

"If this decision is confirmed, we will immediately move to expand our 4G coverage to reach 99 percent of the population by later this year," Penn told media on Friday.

"It also paves the way for ongoing investment in the coming years that would see an additional 1.4 million square kilometres of 4G coverage for regional and rural Australia. This means that about 600 base stations will be upgraded from 3G to 4G.

"If this decision is confirmed, I look forward to Telstra getting on with the job of supporting regional Australia with even more investment."

Telstra had previously flagged its intent to expand its 4G network to 99 percent of the population by mid-2017 -- as long as certain regulatory settings remained in place.

Penn added that the ACCC's decision was the right one to make, as it provides incentives for all other mobile providers to invest in building networks across regional Australia.

"This is the right decision for the people, businesses, and communities of regional Australia, because it ensures the industry still has the incentives to invest," Penn said.

"The overwhelming call from regional Australia was that their top priority was encouraging telecommunications investment to improve and extend mobile coverage.

"Through our own direct investment, as well as co-investment, we expect to see up to AU$1 billion of investment flow to small towns and regional centres across the country over the next five years."

Optus also welcomed the ACCC's decision after backing Telstra up during debate on the issue last year.

"Optus endorses this approach, since it will deliver the best outcomes for regional consumers ensuring that continued investment will be made in regional areas that will give customers access to better coverage and the latest technology," VP of Corporate and Regulatory Affairs Andrew Sheridan said.

"The mobile sector has been the stand-out success story in telecommunications competition. That success has been built on policy settings that have encouraged significant investment in infrastructure, technology, and services.

"Optus has invested over AU$6 billion in its mobile network since 2009."

The Australian Communications Consumer Action Network (ACCAN), which represents the telecommunications needs of regional Australians, joined Telstra and Optus in welcoming the decision and noted that there was no evidence declared 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."

Meanwhile, adding their voices to Vodafone Australia's objection to the decision were incoming mobile network provider TPG; the Competitive Carriers Coalition (CCC), made up of Australia's non-dominant telcos; virtual mobile service provider MNF; and mobile network provider Pivotel.

TPG, pointing towards the "very significant barriers to entry into the market for mobile telecommunications services", said it was surprised the competition regulator was not supporting competition.

"However, 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, added.

"As a result of the draft decision, some consumers may just have to live without the benefits of our competitive force."

TPG is currently raising hundreds of millions of dollars to help fund its new AU$1.9 billion mobile network following its procurement of 2x 10MHz of mobile broadband spectrum in the 700MHz band.

The CCC, meanwhile, said the ACCC's decision will "trap" those living in regional areas with only one option.

"Insanity is continuing to do the same thing again and again expecting a different result," the CCC said.

"Or, in the ACCC's case, continuing to do nothing and expecting by some magic Telstra will stop using its monopoly power to overcharge consumers and undermine national telecoms competition."

The CCC accused the ACCC of confusing the interests of Australian consumers taxpayers with the interests of Telstra's shareholders -- although Penn disputed the claim that Telstra receives subsidies from the government for its mobile network -- saying the regulator has "lacked the courage" to fix Telstra's mobile monopoly.

"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 agreed.

"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."

Mobile satellite provider Pivotel CEO Peter Bolger added that the decision was a "substantial missed opportunity" to increase competition and mobile networks throughout Australia, and to advance the Internet of Things wireless industry.

"While this decision weakens our service offering and the customer benefit that can be derived from it, Pivotel will continue to deliver communication solutions to those in rural and remote Australia," Bolger said.

Earlier on Friday, 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 -- had 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."

The ACCC's draft decision [PDF], announced on Friday morning, acknowledged that while incumbent operator Telstra has an advantage in regional areas, this alone is "not sufficient to justify declaration of a roaming service".

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."

The ACCC is accepting submissions on its draft decision until June 2, and will thereafter make its final decision.

Editorial standards