ACCC will not make Telstra open up its mobile coverage in regional, remote areas

The Australian Competition and Consumer Commission has made a draft decision not to declare wholesale domestic mobile roaming, in a win for Telstra.

The ACCC reached the preliminary conclusion that opening up Telstra's regional mobile roaming will not promote the long-term interests of end-users.

The ACCC took into account whether the difference in geographic coverage between the mobile networks had led to reduced competition or inefficient outcomes in mobile markets, and whether declaration of a mobile roaming service would address such concerns.

The consumer watchdog considered whether "declaring" – forcing Telstra to open up its network to other operators – would promote the long-term interests of end-users by promoting competition, achieving any-to-any connectivity, and encouraging the economically efficient use of, and investment in, infrastructure.

Domestic mobile roaming allows a customer of one service provider to use another carrier's network when outside their telco's coverage area.

ACCC chairman Rod Sims said the regulator did not have enough evidence to determine whether the proposal would improve the current state of competition overall.

"We are extremely conscious of the fact that in regional, rural and remote areas, mobile coverage and choice of service provider are vital issues. However, the effect declaration would have on competition in regional, rural and remote areas is uncertain. While declaration may deliver choice for more consumers, declaration has the potential to make some consumers worse off," he said.

The draft decision found that declaring domestic roaming may not reduce Telstra’s retail mobile prices to a significant extent, and could possibly result in higher overall prices if other service providers raised their retail prices to reflect the cost of roaming access.

Vodafone chief strategy officer Dan Lloyd disagreed with the draft decision. "The ACCC’s disappointing draft decision on mobile domestic roaming is a missed opportunity for regional Australia.

"It denies the benefits of increased coverage, competition and choice to Australian mobile customers, especially hundreds of thousands of Australians living in regional and rural areas," he said.

Lloyd added that too many Australians would continue to be held "hostage" to Telstra.

"Since 2006, Telstra has received around $2 billion in government subsidies and funding to build its regional networks, yet it only spends $150 million per year on mobile in regional areas," he said.

Lloyd claimed that, if the decision was final, Telstra would continue to receive a "disproportionate share of taxpayer subsidies", and initiatives and will not be able to realise their full potential.

"Monopolies don’t drive investment, competition does. Without domestic roaming, the opportunities for investment in areas where it is uneconomical to build more than one network are very limited," he said.

"We strongly disagree with the ACCC’s recommendation, and will work with the ACCC to reconsider its position in its final report."

MNF Group chief executive Rene Sugo said the draft decision reinforces Telstra's monopoly across regional Australia and continues to restrict consumer choice.

"However, the decision is not a surprise as the current legislative and regulatory environment in Australia is weighted against consumer choice and innovation in the telco sector."

The draft decision is a win for Telstra, which has blamed other carriers for failing to invest in infrastructure. The telco is widely acknowledged to have the best regional coverage in Australia.

Telstra chief executive Andrew Penn said the telco was committed to improving its regional mobile networks and would invest up to $1 billion to small towns and regional centres across the country over the next five years.

"If this decision is confirmed, we will immediately move to expand our 4G coverage to reach 99 percent of the population by later this year," Penn said.

ACCC's Sims did concede that regional consumers often face a lack of choice because they only have one network offering coverage in their region or because they need continuous coverage.

"While we [ACCC] do not think that mandated roaming is the answer to these problems in regional and rural areas, we are seeking comment on other regulatory and policy measures that could improve coverage and competitive outcomes," Sims said.

ACCC will take comments from stakeholders before making a final decision towards the middle of 2017.

In September 2016, the ACCC started an inquiry into a wholesale domestic mobile roaming service.