Mobile firms split over roaming changes

Lilly Vitorovich
(Australian Associated Press)

Australia’s big telcos are divided and locked in a lobbying war as the competition watchdog prepares to make a decision that could reshape the national mobile market.

Telstra chief executive Andy Penn and Vodafone boss Inaki Berroeta have been travelling the country and lobbying rural communities for support as the Australian Competition Consumer Commission reviews the rules governing what mobile operators can charge competitors for access to their networks.

Prices for roaming between domestic networks – the function that allows users of Vodafone, for example, to access Telstra’s service in far-flung rural areas – are currently unregulated.

For the third time in 19 years, the ACCC is considering whether to intervene to set the rates mobile network operators charge each other.

Australia’s two biggest telcos, Telstra and Optus, are opposed to mobile regulation, arguing that competition is healthy and regulation will hurt rural network investment.

Vodafone, which has a limited presence in the bush, supports regulation and blames Telstra’s dominance for the lack of competition in regional areas.

Vodafone says the telco giant’s market share in regional areas ranges from “market dominance to absolute monopoly”.

“The source of this market failure is Telstra’s absolute monopoly over an astounding 1.4 million square kilometres, comprising 60 per cent of Australia’s mobile coverage area,” Vodafone alleges in its submission to the ACCC’s inquiry.

Telstra blames any lack of competition on its competitors’ failure to invest in regional areas.

Telstra has the greatest regional coverage after investing billions in mobile infrastructure and says regulation won’t address coverage issues but will stall investment and leave regions worse off.

“Australia has an open and competitive mobile market, with a number of operators competing on a level playing field. It is not a market that is failing or that requires regulatory intervention,” Telstra said in its ACCC submission.

Telstra is expected to be the biggest loser should the ACCC regulate, as it would increase competition and, analysts warn, hurt profits and dividends.

While recognising that there is room to improve some regional services, Optus warns any change will crimp investment and push up prices.

“Since network coverage will no longer provide a point of differentiation, it will be difficult to justify investments in new coverage in the more remote areas,” Optus said in its submission to the ACCC.

The NSW Farmers Association backs the status quo, telling the ACCC greater competition is welcome “but it will never be more important than extended or upgraded coverage”.

If the ACCC regulates roaming, short term competition will likely drive down prices in regions, a telecom analyst, who didn’t want to be named, told AAP.

“However, this will also likely limit future investment intentions of Telstra and Optus in regional areas as the return on investment might not be worthwhile,” the analyst said.

Vodafone also claims Telstra has an unfair advantage via the $300 million it receives annually under the Universal Service Obligation arrangement with the federal government to maintain fixed line voice services and public payphones.

The ACCC is expected to hand down its draft decision in the next few weeks.

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