ACCC shuts down Telstra, TPG regional network sharing deal

The competition watchdog has decided not to authorise the $1.8 billion deal, claiming it would “significantly weaken” telecommunications in the bush.

Competition between network carriers to extend their coverage across the bush would be “significantly weakened” if a $1.8 billion regional network sharing deal between Telstra and TPG were to go ahead, the competition watchdog says.

The Australian Competition and Consumer Commission’s decision not to authorise the proposed 10-year deal that has been in train since May has shocked the telecommunications giants, with Telstra immediately announcing it would lodge an appeal.

TPG is also preparing an application for a review of the decision.

The ACCC said in its determination released on Wednesday the proposed arrangements would likely lead to less competition in the longer term and leave Australian mobile users worse off over time, in terms of price and regional coverage.

“Infrastructure competition is what drives investments by mobile companies in broader, deeper and faster mobile coverage. We have looked beyond the potential short-term effects to consider the long-term impact from the reduced incentive to innovate and improve networks,” ACCC Commissioner Liza Carver said.

“We have concluded the proposed arrangements would likely significantly weaken this competitive process.”

Geoff Kendell tries to get mobile phone coverage on top of a silo on his farm at Kerang. Picture: Dannika Bonser

National Farmers’ Federation chief executive Tony Mahar said better coverage and competition was a priority.

“The ACCC process has been detailed and taken in huge volumes of complex evidence and feedback from stakeholders. Having reviewed everything available, the ACCC has said the deal isn’t in the best long term interests of regional customers. We have to trust that they’ve made the right call for people in the bush,” Mr Mahar said.

The proposed deal would see TPG decommission or transfer its mobile sites in regional and urban fringe areas to Telstra. TPG would then acquire mobile network services from Telstra – increasing its coverage from 96 to almost 99 per cent of the population- in exchange for granting Telstra access to most of its regional spectrum.

Ms Carver conceded the arrangements would lead to “some short-term benefits” from an improvement in TPG’s network coverage and some cost savings and efficiencies for both telcos, but “the enduring and more substantial impact of the proposed arrangements would be to lessen infrastructure-based competition which would make consumers, including those in regional areas, worse off over time”.

The ACCC also held concerns over the prospect of granting Telstra access to more spectrum. Telstra is already the strongest mobile network operator in Australia, and locking up more spectrum was feared to raise barriers to entry and expansion for other operators and reduce incentives and the ability of rivals to compete.

Telstra chief executive Vicki Brady labelled the ACCC’s decision “extremely disappointing” considering the support it has received from regional customers during the consultation process.

“This decision is a massive missed opportunity for the people, businesses and communities of regional Australia. This innovative agreement will deliver real competition-driven benefits for regional Australia, something recognised by the ACCC in its determination,” Ms Brady said.

“It also delivers better use of the Government’s spectrum assets by unlocking unused spectrum that TPG holds in regional Australia but isn’t using.”

ACCC deputy chair Mick Keogh said many regional Australians expressed their support for their deal, which on the surface looked to benefit the bush.

“A lot of the submissions were supportive, and I think probably because of that first glance view that this would introduce a second mobile telecommunications supplier into a region that currently only has one. That was a dilemma. But when you think about it longer term it would remove most of the incentives for Telstra to improve coverage and that’s what concerned us most,” Mr Keogh told The Weekly Times.

The ACCC’s full report on its determination will be released tomorrow following confidentiality checks.