Telco wars: Vodafone steps up fight with Telstra over national roaming

IN A bitter debate with major implications for telcos and customers, Vodafone is stepping up the fight against Telstra.

VODAFONE has stepped up its war against Telstra in the debate around regulating national roaming services and Australian customers, particularly those outside major cities, are caught in the crossfire.

The hostilities come in the wake of the ACCC announcing it will revisit the issue of whether the consumer watchdog needs to mandate and set prices for the amount dominant telcos, mainly Telstra, charge other service providers to use its infrastructure to provide mobile service to all Australians.

It’s a hugely important debate for the industry and has significant implications for its future, as it does for Australian consumers.

All three major telcos offer competitive 4G coverage in all major cities but Telstra has a monopoly in some regional and remote areas, and wants to keep it that way.

Vodafone wants to see the ACCC pull Australia in line with other western countries including Canada, the US and New Zealand which have all introduced regulated inter-carrier roaming.

The move to enforce roaming would boost competition in rural markets by increasing the choice of service providers for those in the bush, however Telstra’s position is that it would remove the incentive to invest in regional infrastructure, meaning Australians in those areas would ultimately lose out.

The debate has largely been carried out via the media but on Thursday the telcos traded blows in front of a live audience at the ACCAN’s (Australian Communications Consumer Action Network) annual conference.

A panel with representatives from Telstra, Optus, Vodafone, amaysim and Activ8me were first tasked with giving a quick spiel on what their company is doing to connect customers and improve their service.

When Vodafone’s chief strategy officer and director of corporate affairs Dan Lloyd got the microphone he wasted no time in steering the conversation to what ACCAN CEO Teresa Corbin described as “the hottest debate in the telecommunications industry in recent weeks.”

“We live in very extreme geography, one of the largest land areas in the world with one of the lowest population densities, and therefore the ability to actually build and duplicate mobile infrastructure across Australia is very limited,” Mr Lloyd said.

Throwing his support behind the ACCC’s announcement, he said the issue was a “main focus” for the company and claimed arguments that it would lead to a lack of investment were “simply not true”.

Vodafone Australia's Chief Strategy Officer and Corporate Affairs Director Dan Lloyd.

“Every other western economy with a large geography and low population density has mandated that same service (national roaming),” he said. “We think this is the only way to have competition and choice for everyone and get everyone connected to a mobile service.”

Telstra’s chief sustainability officer Tim O’Leary wasted little time in firing back.

“There is nothing stopping Vodafone from investing in rural and regional Australia. There is nothing stopping Vodafone from having access to our towers,” he said. “We object to Vodafone from having a free ride.”

Optus’ vice president of corporate and regulatory affairs, David Epstein, then took the microphone and took what could be considered a somewhat surprising stance.

The Optus network is not as extensive as Telstra’s and the company would no doubt benefit from the boost in competition if roaming was mandated, even though it would have to open up parts of its network to competitors.

Far from supporting Vodafone’s position, he characterised Mr Lloyd’s assessment of the situation as “very cheeky but quite wrong” even equating it to “lies”.

“I think the general points being made about Vodafone’s position on this are quite true,” he said but suggested the company’s intense support for enforced roaming was opportunistic.

He also said the markets in the US, Canada and New Zealand had different complexities that meant they shouldn’t be applied to Australia’s situation.

Telstra mobile phone towers have the biggest presence in regional Australia.

SO WHAT IS THE BEST OUTCOME FOR CUSTOMERS?

That question is the very focus of the ACCC’s inquiry into the matter and is by no means an easy one to answer.

In announcing the inquiry on September 5, ACCC Chairman Rob Simms said: “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.”

He acknowledged the inquiry would carefully consider the possible impact roaming would have on investment in the market.

“We do think it’s time we look at the issue again in detail, and examine some of these key matters, including consumer demand, network investment, and barriers to competition,” he said.

Paul Budde is a telecommunications analyst and the former top adviser to Stephen Conroy during his time as the Minister for Communications in the Gillard Government. He says things are different since the ACCC last visited the issue in 2005 and 1998 and decided not to intervene.

“It all comes down to the fact that mobile is becoming a utility and is something that is no longer a luxury item,” he told news.com.au.

“It has become a right that everyone should have access to mobile and the whole issue is how do you organise that.”

Telstra says its 4G network will cover 99 per cent of the population by June 2017. Optus claims its entire network can offer service to 98.5 per cent of the population. Meanwhile Vodafone says its 4G network covers more than 95 per cent of the population, but its presence in remote Australia is the missing piece.

That’s a very high degree of coverage but in the end that is only seven to 10 per cent of the country’s landscape, Mr Budde said.

Vodafone is hoping regulated roaming can allow it to expand its regional reach.

The government has picked up the slack in areas with very poor or no coverage by contributing $500 million with the announcement of its black spots program, allowing telcos to bid for public money to subsidise the building of towers.

“In areas where it is not economically viable, the government is making money available under the black spots program and what that means is in those areas there will only be one provider, the one that bids for it and gets it,” Mr Budde said. “Now the argument is that if you spend government money on black spots than you actually should create that in such a way that there is competition.”

He believes in areas where there is no competition between service providers, “that’s where roaming should occur.”

VODAFONE READY FOR A FIGHT

From a business point of view, Vodafone has the most to gain from enforced inter-carrier roaming. While they would have to pay Telstra, or Optus, a wholesale price to use its network in certain areas it would allow them greater access to potential customers.

As a result, Vodafone has been leading the campaign for roaming as Telstra digs in its heels to oppose the idea.

Speaking to news.com.au, Dan Lloyd took issue with Telstra’s claim Vodafone is seeking a free ride.

Stopping short of calling the dominant telco hypocritical, he categorised Telstra’s accusation as “bizarre”.

“Telstra inherited the taxpayer-funded fixed and mobile networks ... 16 years after it built out its mobile network and then through things like the Universal Service Obligation receives $300 million a year to subsidise the copper fixed network,” he said.

“The idea that a company that receives really unprecedented taxpayer and other subsidies to build out its network to then claim we’re asking for a free ride is indeed a curious contradiction.”

At present, Telstra allows companies to piggyback on parts of its network at negotiated prices. One way it does this is called co-location by which Telstra makes its towers available to other service providers to put their own radio transmission equipment on.

“It does help to save a little bit of the cost but not much, ... You’re still duplicating most of the infrastructure the only thing you’re saving is the physical tower. Everything else your duplicating,” he said. “Two sets of radio access equipment, two sets of power supply, two sets of transmission.”

Mr Lloyd said those costs amounted to a barrier for regional expansion for the company and occasionally Telstra was less than cooperative with requests for co-location infrastructure.

For its part, Telstra is sticking to its claim that forced roaming will leave virtually no reason for any mobile phone company to invest in new coverage or better technology.

The ACCC has yet to open up the inquiry to submissions from stakeholders, but when it does the fight could get even uglier.