Telstra’s huge $546m win

Thursday

Many rural Australians will be forced to use Telstra after the ACCC ruled against mandated domestic roaming. Picture: Jamie Hanson

TELSTRA has notched a major win this morning as the country’s top consumer watchdog announced it won’t force it to share its mobile network with other telcos.

The decision means customers not with Telstra won’t be able to use their mobile towers when their own carrier doesn’t provide coverage (for example, in a small country town).

It’s been a major battle for the industry over the past six months, since the Australian Competition and Consumer Commission (ACCC) opened an inquiry.

It’s the third time the issue has been investigated following inquiries in 1998 and 2005 and the latest instalment basically boiled down to a bitter back-and-forth between Vodafone and Telstra, with the former railing against the entrenched dominance of the legacy provider.

If domestic roaming had been mandated it would mean, for example, that if you’re with Vodafone and travelled to the bush outside the company’s mobile footprint, you would simply move onto Telstra’s mobile network and maintain reception.

But the ACCC was doubtful the move would help overall competition in the industry.

“The ACCC has insufficient evidence that declaration will improve the current state of competition overall,” ACCC Chairman Rod Sims said in a statement.

“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.

Vodafone had fought hard to convince the consumer watchdog of the benefits of domestic roaming for consumers.

The telco argued the increased competition would give those outside the major cities more choice in their mobile plan and drive down the price for customers by allowing other telcos to chip away at Telstra’s rural dominance and better compete in areas where it is less economical to build more towers.

However Telstra was successful in convincing the ACCC otherwise. Telstra claimed mandated roaming would have a chilling effect on investment in mobile infrastructure in regional Australia because it will take away the incentive to invest in such areas.

A number of submissions to the inquiry from regional councils and regional stakeholders supported Telstra’s position.

Vodafone has described the ACCC’s decision as “disappointing” and a “missed opportunity”.

“Too many Australians will continue to be held hostage to Telstra, and will have no choice but to pay Telstra’s mobile premium,” Vodafone said in a statement.

“The telecommunications divide between the cities and regional areas will only continue to widen, as no other operator will be able to close the coverage gap between Telstra and the rest of the industry.”

Investment Bank Goldman Sachs had previously estimated that if domestic roaming is mandated by the ACCC, Telstra would lose $546m in full-year earnings for 2017-18 because its rural margin would be swallowed up.

News.com.au has contacted Telstra and Optus for comment.

Telstra will build 429 new 3G or 4G towers nationally including across North Queensland as part of the Federal Government's Mobile Black Spot Program.

Telstra will build 429 new 3G or 4G towers nationally including across North Queensland as part of the Federal Government’s Mobile Black Spot Program.Source:Supplied

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