Telstra/TPG knockback leaves mobile mess

Anything that makes Telstra stronger has to hurt its competitors and competition - that’s essentially the logic behind blocking its deal with TPG. But the decision has left a mess.

It seems so obvious. Telstra is already the elephant in the mobile telco room; so anything that makes it stronger has to hurt its competitors and so competition.

That’s essentially the logic of both the initial ACCC prohibition on Telstra acquiring regional mobile sites and spectrum from TPG, and now the Competition Tribunal’s endorsement of the ACCC decision.

Except, I might note, it hasn’t always been obvious to our competition czar, the ACCC.

Back in 1999 the ACCC prohibited Optus bulking up by acquiring a struggling smaller telco – preferring Telstra to remain dominant rather than see the number of putative competitors in the industry reduce by one.

It was a ludicrous anti-competitive decision then and remains so today.

So has the ACCC – and the appeal Tribunal – at least got it ‘right’ now?

That’s by no means clear, either in general competition terms, or in the specific context of the horrendously complicated mobile telco space where access to spectrum is fundamental to everything.

It’s simply not possible to have a hundred spectrum-owning flowers blooming, so to speak.

There are only three full-service network providers – Telstra, Optus and Vodafone.

They compete head-to-head in their own right, with parallel competition coming from all the other providers who access their networks.

Essentially, the ACCC/ACT argument says that a Telstra boosted by TPG’s towers-plus-spectrum would substantially reduce Vodafone and especially Optus’s ability to compete.

But it would also clearly boost TPG’s ability to compete, as it got access to more of Telstra’s network.

Indeed, that’s precisely why TPG wants to do the deal – the alternative it now faces is potentially slow decline and ultimately its removal as a major competitor from the market.

Unless of course it could do a similar deal with Optus; whether, again of course, its towers and spectrum would be meaningful to Optus.

But then, what would the ACCC think about that? Would it see such a proposal as also “substantially lessening competition”, like it did in rejecting the proposed Optus buy of AAPT in 1999?

The central problem in all this is the utter mess we have made in rolling out spectrum.

That’s been left entirely to a staggered auction process that sits on top of legacy 20th century allocations of spectrum across the, well, spectrum from free-to-air TV and radio to specialised networks like police and emergency services.

There’s much talk of how wonderful 5G is and how we will now move to 6G.

But just take a look at the hotch-potch chaos of any telco coverage map, and I’ll believe even 5G when it really happens. And happens, really competitively.

The Telstra-TPG move was a market-driven step to getting some rationalisation and cohesion in spectrum utilisation.

It’s ultimately what we need precisely to maximise competition and lower prices.

But we need at least an Optus – and possibly, realistically, only an Optus – to have sufficient access to the right spectrum to match Telstra.

Unless we are going to do a mobiles version of an NBN owning the infrastructure - towers and spectrum – and then hoping a hundred services providers would bloom below that.

But an even bigger mess that doesn’t bear thinking about.

Originally published as Telstra/TPG knockback leaves mobile mess