ACCC concerned about "very concentrated" spectrum holdings

The Australian Competition and Consumer Commission has released a statement of preliminary views on the proposed Telstra and TPG Telecom network sharing deal, and is now calling for further submissions from the telco industry.

The statement expressed concern about "very concentrated" holdings of spectrum potentially creating a disincentive for telco licensees to “dispose of licences surplus to their technical or commercial requirements and create an incentive to ‘’lock up’ this scarce resource.”

The competition watchdog noted that a healthy secondary market for spectrum licences allows spectrum “to move to its highest value use” and allows for the deployment of “new and innovative services” over time.

“The ACCC considers that an increasing concentration in the ownership of regional spectrum may form a public detriment,” the statement reads.

“Spectrum is a scarce and valuable resource, and a critical intermediate input into all wireless networks. Without sufficient access to spectrum, potential operators are unable to offer services in downstream markets and compete with incumbents.”

ACCC commissioner Liza Carver said in an announcement, “The ACCC has today set out issues for further consideration, and is calling for further views from industry and consumers on how these agreements may impact competition and whether there are public benefits.”

“Mobile companies compete in terms of the infrastructure and spectrum they have, as the infrastructure and spectrum impacts on coverage and speed which are important to customers. We are assessing how the proposed infrastructure and spectrum arrangements between TPG and Telstra will change the incentives and ability of Telstra, TPG, Optus, and other market participants to compete and to invest in mobile service infrastructure.”

In an announcement to the ASX, TPG stated, "Although a number of issues have been raised, the ACCC has accepted that with the proposed network sharing arrangement with Telstra, 'TPG will likely be able to immediately offer an improved product to customers who value better regional network coverage, therefore enabling it to better compete for customers it does not currently serve'".

TPG added that “If approved, the arrangement will be a win for regional Australia, drive significant growth in our customer base in regional and metropolitan areas, and provide significant value for TPG Telecom shareholders.”

“Infrastructure sharing is the future of telecommunications and our proposed arrangement with Telstra demonstrates best-practice asset utilisation, delivers greater competition and capital efficiency now and in the future, and significant public benefits,” TPG stated.

The ACCC's consultation about the deal will continue into December, when it plans to announce its final decision approving or disapproving the proposal.

Carver stated, “There is still a lot of work to do on this complicated and nuanced review, which is of critical importance to competition in the mobile telecommunication sector. At this stage we have not reached any overall conclusions, but welcome further submissions from stakeholders and consumers alike on the issues raised.”

“We are looking extremely closely at all aspects of these agreements, as a decision either way can have significant long term effects.”