Australia’s competition watchdog has ruled out setting prices to allow Telstra’s competitors to roam on the telco’s regional mobile network, saying there was not enough evidence that regulating access would improve competition.
Shares in Telstra jumped following the Australian Competition and Consumer Commission’s decision on Friday.
Those of TPG – the newest entrant to the mobile market – and Hutchison Telecommunications – part owner of the local Vodafone network – slumped in an indication of the impact of the regulator’s decision on smaller players.
The ACCC said in a draft decision that it had decided against declaring a wholesale domestic mobile roaming service, which would have forced Telstra to share its regional mobile network for a fee determined by the regulator.
“There is insufficient evidence to suggest that declaration of a mobile roaming service in regional and rural areas would further lower prices or improve services, given the higher costs in servicing these areas,” ACCC chairman Rod Sims said.
“While a declaration may deliver choice for more consumers, it has the potential to make some consumers worse off.”
The decision marks a win for Telstra and Optus – Australia’s biggest telecommunications companies with about 27 million mobile subscriptions between them – who had opposed any regulation.
Telstra would have been the biggest loser because a change would increase competition and drive down prices, putting pressure on its profitability.
“This is the right decision for the people, businesses and communities of regional Australia because it ensures the industry still has the incentives to invest,” Telstra chief executive Andrew Penn said.
By 1500 AEDT Telstra shares were up 3.9 per cent, haveing been up five per cent earlier in the day.
Vodafone Australia, which had pushed for the regulatory intervention, described the ACCC’s decision as “disappointing” and “a missed opportunity for regional Australia”.
“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,” its chief strategy officer Dan Lloyd said in a statement.
Shares in TPG Telecom, which in April announced plans to spend $1.9 billion to build Australia’s fourth mobile network, were down four per cent in afternoon trading, as were Hutchison shares.
Peak communications consumer body ACCAN (Australian Communications Consumer Action Network) welcomed the decision, saying it was unclear whether regulated domestic roaming would result in better mobile coverage and improved competition in regional areas.
The ACCC said it will deliver a final decision by mid-2017 after further consultation with stakeholders and looking at other regulatory and policy measures for regional areas.
“We are looking at five areas where extra things can be done – accessibility to towers, the mobile Black Spot program, spectrum allocation, how consumers can be informed better, and what the presence of NBN (the national broadband network) can do,” Mr Sims said.
He said the regulator would monitor the situation and step in if mobile operators were unable to reach commercial agreements due to competitive reasons.
The ACCC inquiry, the third review in 19 years, was launched in September 2016, with the regulator saying that access to a roaming service would enable mobile companies to provide coverage for customers in areas where they don’t have their own network.