Tribunal upholds decision to block Telstra & TPG network sharing

Telstra and TPG network sharing regional deal blocked
Source: Telstra

Local telcos Telstra and TPG won’t be able to move forward with a proposed network-sharing deal in regional areas, following another blockage at the hands of the Australian Competition Tribunal.

Under the proposed agreement, Telstra would have authorised TPG access to mobile network infrastructure in regional areas. As it currently stands, TPG’s coverage encompasses 96 per cent of the Australian population, which would have risen to 98.8 per cent had the proposed deal progressed.

The Australian Competition and Consumer Commission (ACCC) initially prevented the move in December 2022, citing the likelihood of reduced competition in the long run. Telstra then appealed the decision, taking it to the Australian Competition Tribunal, only to have the original decision upheld.

Major telcos respond to the decision

In a statement to investors, Telstra expressed its disappointment at the Tribunal outcome. Telstra CEO Vicki Brady believed that the company’s proposal had “overwhelming support” from regional Australia.

“What we’ve tried to do is take an innovative approach to improve experiences for our customers and to answer calls from stakeholders, including governments, to provide better mobile connectivity, more coverage and more choice for our customers,” Brady said. “The agreement with TPG would deliver these benefits almost immediately and for the long-term.”

TPG followed suit with a statement of its own, with Chief Executive Iñaki Berroeta claiming that the decision “entrenches the status quo for mobile coverage in regional Australia”.

“We are not giving up on regional Australia and will consider our options as well as advocating for policy reform that will deliver greater competition and choice in the regions that need it most,” Berroeta said.

Optus, on the other hand, welcomed the Tribunal’s verdict. Fresh off reaching a confidential settlement with Boost Mobile for alleged trademark infringements, the major telco labelled the blocked deal between Telstra and TPG a “win for Australians”. Optus CEO Kelly Bayer Rosmarin referred to the proposed network-sharing deal as “anti-competitive”.

“This reinforces the importance of infrastructure-based competition and investment in our communications sector that will have lasting benefits for regional Australia,” Bayer Rosmarin said. “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 great service.”

Telstra’s network covers 99.5 per cent of the Australian population, while Optus covers 98.5 per cent. If the network-sharing deal went through, TPG’s coverage would have risen above Optus’. In the ACCC’s original decision to block the deal, it accepted more than 170 submissions as part of the public consultation process. Reduced market competition was a core part of the ACCC’s initial deliberation, according to ACCC Commissioner Liza Carver.

“While Telstra and TPG have claimed the agreements will immediately lead to more choice for customers and better coverage for TPG customers, this misses the more significant impact on consumers which is that the reduction in competition in the longer-term will likely lead to higher prices, less innovation and quality of service, and less competitive pressure to expand and improve networks,” Carver said in 2022.

For now, Telstra and TPG are reviewing the Tribunal’s decision, with further action a possibility.

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