Following the Australian Competition Tribunal’s decision in June to deny the Telstra and TPG regional network sharing deal, the telcos have decided to not proceed with an appeal to the federal court. Instead, Telstra and TPG are reportedly working on a new ‘blueprint’, similar to what the ACCC shot down in 2022, but with some acceptable changes.
As reported by The Australian, it’s expected that some big changes to the original plan would need to be introduced if it were to ever overcome scrutiny from the ACCC. A shorter-term agreement, perhaps down to five years rather than 10, and a smaller coverage-sharing area could help push the deal over the line, the newspaper reported.
To put simply, in early 2022, Telstra and TPG came together to propose a network-sharing agreement in regional Australia. It took until December 2022 for the ACCC to decide that it would likely be detrimental to competition in Australia – so the merger was denied. The telcos then appealed the decision, via the Australian Competition Tribunal, which said no, the ‘merger’ can’t go ahead. Well, in June 2023, its exact words were:
“The Spectrum Authorisation Agreement provides Telstra with substantial commercial and competitive benefits and would further increase Telstra’s position of market strength in mobile telecommunications markets.”
The Tribunal was not satisfied by the proposed arrangements, stating that it wasn’t convinced that there wouldn’t be a substantial lessening of competition, or that public benefit would outweigh the detriment.
Throughout the process, it was argued that if the deal were allowed, it would have undermined Optus’ investments in 5G, and would weaken telco competition in Telstra’s favour.
At the time, Telstra said it would carefully consider the Tribunal’s outcome.
“Spectrum needs to be made available to those who can use it most effectively for the benefit of customers. All mobile network operators are facing the ongoing challenge of how to provide more capacity for customers to do all the innovative things they want using our mobile networks. From smart farming, mobile health care and remote education, through to the kids watching movies on family road trips,” Telstra CEO Vicki Brady said in a statement.
“As we consider this outcome, we are also calling for a rethink of policy on spectrum access in light of the ever-increasing demand for mobile data.”
TPG also flagged it would consider a further appeal, including to the federal court, but we now know that won’t happen.
Meanwhile, Optus was of course satisfied with the outcome.
“This is a good outcome for our regional communities as it will mean they will continue to benefit from competition as Optus reaffirms its commitment to providing Australia’s regional communities with a strong network and a great service,” Optus CEO Kelly Bayer Rosmarin said.
If we take a step back to December, when the ACCC made its initial decision, it said it was unsatisfied with the proposal and came to the conclusion that it would lead to less competition in the long term, and therefore leave Australian mobile users worse off.
“Mobile network operators compete on price and a user’s package inclusions, but importantly, they also compete on coverage, speed and other quality dimensions that are directly influenced by the nature and extent of their underlying network infrastructure,” ACCC commissioner Liza Carver said at the time.
“Entering into the arrangements proposed by Telstra and TPG will represent a significant change to the structure of the market that would have long-term consequences.”
Telstra’s dominant position in the mobile market was also considered, and negative impacts on coverage, network quality, and innovation were also brought up in the ACCC’s determination.
More than 170 submissions, 40 witness statements and external reports were considered, with strongly competing views expressed by parties.
The Telstra-TPG network sharing deal, explained
The deal was set to last for 10 years, dubbed the “Multi-Operate Core Network” (MOCN) commercial agreement. Telstra said it would provide wholesale customers with greater value while also giving TPG customers access to greater 4G and 5G services within regional Australia.
The announcement came just days after the 2021 Regional Telecommunications Review was published, highlighting key problems throughout regional Australia’s telco infrastructure.
It was noted that the bushfires between 2019 and 2020 caused significant pressure for networks in regional Australia and that the pandemic put major pressure on the existing regional infrastructure.
“The Applicants seek merger authorisation of the use by Telstra of spectrum held by TPG (pursuant to the Spectrum Authorisation Agreement), which is deemed by section 68A of the Radiocommunications Act 1992 (Cth) to be an acquisition for the purposes of section 50 of the Competition and Customer Act 2010 (Cth) (the Act),” the ACCC website read.
Under the deal, TPG would decommission 725 signal towers in areas already covered by Telstra’s network, although the company would get network access to 3,700 Telstra towers.
What this deal meant for customers is that Telstra and TPG would share their networks and mobile network sites in regional Australia.
If the deal went through, TPG’s 4G coverage of Australia would bounce from 96 per cent to about 98.8 per cent. Meanwhile, Telstra’s access to TPG’s infrastructure would increase available capacity to its customers, opening up Telstra’s user base to TPG’s 4G and 5G spectrums.
Both telcos would continue to operate their own networks individually, especially where key functionality differences between the companies exist (say, for example, differences in offered plans or in metropolitan area signals).
“This additional spectrum will mean that all Telstra customers will continue to experience Australia’s best and fastest network across the country, in combined 4G and 5G speeds,” Telstra’s former CEO Andy Penn said at the time.
“With more people moving to regional areas as a result of COVID, congestion in some areas has increased. This additional spectrum will also ensure that Telstra customers will experience significantly reduced congestion at busy times.”
Under the arrangement, Telstra would deploy additional infrastructure at up to 169 TPG Telecom sites, which would improve the network experience for both Telstra and TPG customers within signal range.
“We will be open for business in regional and rural Australia like never before, offering a 4G network that provides 98.8 per cent population coverage and rapidly growing 5G coverage across the nation,” added Iñaki Berroeta, TPG Telecom’s CEO.
“The agreement demonstrates best-practice asset utilisation and a commitment to rationalising our operations to deliver a better customer experience, while increasing capital efficiency.”
Criticisms of the deal
Both Optus and NBN Co criticised the network-sharing plan. Naturally.
Optus, the main competitor to both Telstra and TPG, saw it as a massive competition concern, saying that it could see a return to monopolisation in regional Australia (it has been saying this since the plan was announced). The telco believed the plan would lead to higher prices, lower investment, lower network quality, less consumer choice and less infrastructure resilience.
“The proposed network merger will not improve community or customer outcomes. If approved, it will have major adverse and irreversible consequences for the communications sector and ordinary Australians, especially those living in our regions,” Optus claims in its submission to the ACCC.
“It will strengthen Telstra, weaken Optus and the competitive pressure that Optus imposes on Telstra.”
But, of course, Optus stood to lose the most from this deal. Ultimately, Optus would have needed to compete with two network operators sharing resources instead of just two networks going forward. Optus’ managing director for enterprise, business and institutional operations, Gladys Berijiklian (former Premier of NSW), also posted a blog post against the plan.
Optus’ claims were addressed by TPG in a statement made in July, with TPG saying they amount to “scaremongering”.
“TPG was surprised by the recent attempts by Optus and its leadership team to leverage the suffering of communities affected by bushfires and floods for social media stunts criticising the arrangement,” TPG said in the statement.
“Optus has engaged in scaremongering and rolled out its executives to trumpet the same lines regarding resiliency and future regional investment. This is an insult to regional mobile users who will benefit from the network sharing arrangement,” said James Rickards, TPG’s general manager of external affairs.
“It is a disappointment to our industry Optus chose to use emotionally manipulative images of kangaroos seeking to escape a bushfire, in an increasingly desperate attempt to stop a competition-enhancing arrangement. Such posts have been recognised by the Australian public for exactly what they are: misguided and inappropriate.”
NBN Co, on the other hand, was concerned about how the network sharing plan could impact its 5G spectrum for fixed wireless broadband services in regional Australia. NBN doesn’t have phone plans, but it does offer internet in regional Australia on the 5G spectrum.
“We submit that the ACCC’s assessment should consider Telstra’s ability to enjoy access to TPG’s spectrum for the proposed extensive duration and its impact on the primary market for spectrum (including as a result of its impact on relevant mobile markets),” NBN Co said in its submission.
Additionally, Aussie Broadband and Kogan made submissions. Aussie wasn’t entirely opposed to the network sharing plan, saying that it should be conditional on Telstra to provide open access to network and antenna sharing for potential carriers in the future.
Kogan was in favour of the network-sharing plan, considering that it’s a Vodafone MVNO.
Anyway. We may not have seen the end of the Telstra-TPG regional network-sharing deal. No doubt we’ll update this article in the near future.
This article has been updated since it was first published.
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