TPG-Vodafone joint bid not a threat to 5G spectrum: ACCC

The ACCC is more concerned with ensuring telcos gain access to 5G spectrum than it is with the government making less money through the auction, Rod Sims has said.
Written by Corinne Reichert, Contributor

Australian Competition and Consumer Commission (ACCC) Chair Rod Sims has told Senate Estimates that while allowing Vodafone Australia and TPG to jointly bid for 5G spectrum would reduce competition during the auction, it will have the opposite effect for the telecommunications market.

Responding to questions from Senator Kristina Keneally on Thursday morning, Sims repeated previous arguments that the government should be less concerned about making money from spectrum and more concerned about providing the best value for consumers.

"Our view at the ACCC has always been we're not so much concerned with the money raised from spectrum; we just want to make sure the spectrum can go to players so that they can operate in the market and be competitive in the market," Sims said.

"So this joint venture coming together to bid in the auction did not affect issues that we the ACCC were most concerned about. It certainly affected issues the Department of Finance is concerned about, but not issues we're concerned about."

According to Sims, the ACCC had additionally got Vodafone and TPG to sign an undertaking not to further their joint venture beyond bidding for the 5G spectrum -- and the joint venture actually achieves what the ACCC had in mind in the first place, Sims added, in that it allows all players to have access to spectrum in the market.

"We don't see that there's any lessening of competition through Vodafone and TPG bidding for spectrum together, because once they've got that joint spectrum, they can participate individually in the marketplace," he explained.

The spectrum auction results should be made available in early December, Sims said, adding that the ACCC had originally recommended competition limits of 40MHz.

The Australian Communications and Media Authority (ACMA) had finalised the arrangements for the 3.6GHz 5G spectrum auction back in August, saying it will be held in late November with allocation limits of 60MHz in metro areas and 80MHz in regional areas.

The ACMA will auction off 125MHz of spectrum in the 3.6GHz band in total -- 350 lots across 14 regions of Australia.

The non-refundable application fee to take part in the auction has been set at AU$10,000, with the metro spectrum reserve price to be AU$0.08 per MHz per population excluding Perth lower lots and AU$0.053/MHz/pop for Perth lower lots.

The regional spectrum will start at AU$0.03/MHz/pop, with all lots to be auctioned off in an enhanced simultaneous multi-round ascending format using software developed by Power Auctions.

Alongside the announcement of a merger, TPG and Vodafone had in August said they would form a joint venture to join forces in bidding for the 5G spectrum, which will proceed regardless of whether the merger is approved.

TPG CEO David Teoh said a merged entity combining his company with Vodafone Hutchison Australia would be "very aggressive", with the telecommunications giant said to have an enterprise value of around AU$15 billion.

The new TPG will see Vodafone Australia CEO Inaki Berroeta serve as CEO and Teoh as chair, and will produce revenue of AU$6 billion, EBITDA of AU$1.8 billion, and have an operating free cash flow of AU$900 million, the companies claimed.

Government extends ACCC chair's term to 2022

The Australian government has also announced that Rod Sims will remain as ACCC chair until August 2022 after "outstanding" success in extracting hundreds of millions of dollars in financial penalties from telcos and tech giants.

Australian Treasurer Josh Frydenberg said Sims had secured almost AU$170 million in competition and consumer law breaches from companies during 2017-18; prosecuted a criminal cartel case in 2017; and attained court-enforced penalties against telecommunications, automotive, and other companies.

"Sims' reappointment will ensure continued stability and strong leadership of the commission, particularly with important inquiries currently under way including the impact of digital platforms such as Facebook and Google on Australian media and advertising markets," the treasurer said.

Sims had in August flagged a ninefold increase to the penalties the consumer watchdog will be able to wring out from tech and telco companies, with legislation increasing fines from AU$1.1 million to AU$10 million.

Penalties against individuals under Australian Consumer Law -- with the ACCC also saying it "may bring proceedings against executives who knowingly approve misleading advertisements" -- have also been upped, from AU$220,000 to AU$500,000 for each breach.

"In the courts, we are getting better at arguing for and receiving, or reaching agreement on, more meaningful sanctions under the existing law," Sims said, pointing to the AU$10 million extracted from Telstra and AU$9 million from Apple in the last six months.

During the last year, the ACCC also forced Telstra, Optus, TPG, iiNet, Internode, Dodo, iPrimus, and Commander to compensate tens of thousands of customers for not providing them with the National Broadband Network (NBN) speeds they were paying for, as well as fining MyRepublic AU$25,000 for making false or misleading representations about its NBN speeds.

The last few months has also seen the ACCC take action against Amaysim's Click Energy, Optus, and Trivago, as well as successfully fighting its cases against Fitbit, HP Australia, and Valve.

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