ACCC to review roaming charges

An article in InnovationAus discusses the Australian Competition and Consumer Commission’s (ACCC) announcement of an inquiry into “whether or not to declare a wholesale domestic mobile roaming service” is a timely reminder that the troubled Australian mobile cellular market remains one of the most expensive and least competitive in the world.

Read the full article below

The Australian Competition and Consumer Commission’s (ACCC) announcement of an inquiry into “whether or not to declare a wholesale domestic mobile roaming service” is a timely reminder that the troubled Australian mobile cellular market remains one of the most expensive and least competitive in the world.

It is now more than a decade since the last of two earlier reviews conducted by the ACCC into mobile roaming, and on both occasions “it decided not to regulate an access service as it was satisfied roaming agreements were being commercially negotiated.”

ACCC Chairman Rod Sims identified changes to consumer demand and the evolution of the telecommunications market over the past decade as a starting point for the new inquiry.

“Network coverage is clearly a key feature of a mobile service, and each of the mobile network operators has extended its networks since we last looked at this issue in detail,” Mr Sims said.

“A lot has changed since 2005. We do think it’s time we look at the issue again in detail, and examine some of these key matters, including consumer demand, network investment, and barriers to competition. We consider the most efficient way to do that is to consider all of the issues carefully through a declaration inquiry.”

The focus for the inquiry is to identify “whether declaration of a mobile roaming service would deliver benefits for consumers.”

“A particular area of concern for us is whether consumers would, in fact, be disadvantaged if the incentives to invest in expanding the reach of mobile networks were reduced,” Mr Sims said.

It is this last point that is the focus of Telstra’s response to the ACCC’s announcement of the declaration inquiry on mobile roaming.

Telstra Group Executive Corporate Affairs, Dr Tony Warren said “Declaring mobile roaming would stop coverage being a differentiator in the Australian market and therefore, remove the key rationale for investment in regional Australia for all operators.”

“Declaration would ensure there is no incentive for any operator to invest for competitive reasons in many regional areas. In contrast, history shows that when declaration is ruled out, investment flows for regional Australians. We have only just been made aware of this inquiry so we must now consider the implications of potential roaming regulation for our investment plans.”

With a sense of déjà vu Telstra’s statement carries a simple idiomatic message – declare a wholesale domestic mobile roaming service and “I’m going to take my ball and go home.”

It was a similar dummy spit by Telstra that led to the National Broadband Network (NBN) back in the mid-2000s.

Telstra appears to have left no wriggle room by taking an unjustifiable position with an argument that sounds like a broken record. Did Telstra seriously think through its response to the ACCC announcement? Or does it think that it can attempt to bully the ACCC into providing an outcome that favours Telstra and the status quo?

Past decisions by the ACCC may not have benefited Telstra financially at the time, but two positive outcomes have occurred. Telstra has had to become more competitive and to seek new business opportunities. Also, the telecommunications industry has experienced an improvement in open and fair competition.

As recently as 2013 when the ACCC commenced a declaration inquiry into a domestic mobile terminating access service, Telstra made similar statements about the negative effect it would have on its business, future investment and how a declaration would disadvantage consumers. Telstra failed to sway the ACCC’s decision. In October 2015, Telstra reported that it would see a $350m reduction to revenue in fiscal 2016.

Both Optus and Vodafone have welcomed the ACCC inquiry and have argued that the current requirement for each of the mobile cellular operators to rollout separate infrastructure is not practical due to customer density, and the result is an anti-competitive situation where Telstra’s mobile network coverage is far larger than its competitors.

Telstra has made a lot of noise about investment in regional and remote areas to build Australia’s largest mobile cellular network. What Telstra is not saying is how much funding it has received from business, councils, and State and Federal governments over the past twenty years that has been used to build sections of this much vaunted mobile cellular network.

In defence of its claims, Telstra should therefore have no qualms with releasing a full accounting of all funding received from business, councils, and State and Federal governments over the past twenty years that has been put towards the partial or full cost of fibre backhaul, transit links, mobile cellular towers and other infrastructure and systems.

It could also provide advice as to whether or not the funds were provided as part of a black spot program, the universal service obligation or some other program such as the announcement in January 2016 of $16.5 million in council, State and Federal Government funding towards fibre links to four towns in western Queensland.

Claims from telecommunication companies that cannot be justified are part and parcel of everyday life in Australia.

It is timely to remember that it was only a couple of years ago when mobile cellular operators were under serious consumer pressure over the rapid growth in bill shock resulting from international mobile data roaming charges.

In an almost miraculous coincidence, the mobile cellular operators found, within a matter of weeks, that they were able to significantly reduce mobile international roaming charges, after having made claims for many years that it would be nearly impossible to do so due to factors outside their control.

For regional areas, the demand for mobile services are evolving and it is important to identify the different consumer groups and how they utilise mobile services. Residents of regional and remote areas are key to this issue, and their voice must be heard, for the lack of access to mobile services and adequate competition detrimentally affects their lives and business opportunities.

Tourism and access to itinerant workers are key drivers of regional business and for many tourists and itinerant workers the cost of Telstra’s “premium” mobile service and its domestic mobile roaming charges are too high. Regional areas without at least one of the other mobile cellular operators can be at a significant disadvantage.

It is not just Optus and Vodafone customers that are affected by the lack of a competitive mobile roaming regime in regional areas. Many smaller Tier 2 and 3 mobile providers are, to some extent, more affected by the lack of a competitive mobile roaming regime in regional areas.

The NBN adds complexity to the deliberations within the ACCC on this occasion and it is as yet unknown how the ACCC will view the potential for NBN Co to offer infrastructure access agreements and wholesale bitstream products to mobile cellular operators within regional areas. There is the potential for NBN Co to co-invest in multi-use infrastructure with the mobile cellular operators.

It would be wrong for the Government or the ACCC to limit this option as there is a national imperative to optimise the NBN’s reach and viability. Would the government step in and prohibit NBN Co from offering infrastructure access agreements and wholesale backhaul bitstream products to mobile cellular operators? We will have to wait to see if the Government makes a submission to this inquiry.

Over the past three years, Optus and Vodafone have agreed to jointly build and use mobile network infrastructure, and NBN Co has trialled providing access to its fixed wireless infrastructure and backhaul to the three mobile cellular operators.

Other opportunities to improve regional telecommunications utilising the NBN were recommended by the 2015 Regional Telecommunications Independent Review Committee. The Government appears to be taking a glacial approach to considering and acting on these recommendations.

The NBN should be used to provide competitively priced access to infrastructure and wholesale backhaul bitstream products in regional areas. The NBN becomes more viable as it grows both in size and offerings to consumers and other businesses such as mobile cellular operators.

Telstra will be aware that if it should reduce infrastructure investment in regional areas then it becomes a fait accompli for NBN Co to take on the mantle of regional and remote infrastructure provider for the mobile cellular operators. And if this were to occur the basis for a declared wholesale domestic mobile roaming service becomes straight forward.

Telstra would do well to realise that it is only a matter of time before the ACCC declares a wholesale domestic mobile roaming service if it does not come to the party and take the sensible approach, which is to increase infrastructure access to its competitors and significantly reduce domestic mobile roaming charges.

If the outcome of the ACCC inquiry is based on consumer demand, business needs in regional areas, the lack of open and fair competition and the unjustifiably high roaming prices then the decision become straightforward.

Mark Gregory is a senior lecturer in the School of Engineering at RMIT University

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