Big business vs consumer needs?
IF you’re into consumer protection, you are likely to welcome news that the ACCC (Australian Competition and Consumer Commission) has refused an application from a big corporation to do this or that.
Ha, you may think – one in the eye for capitalism and profiteering!
Unfortunately, the ACCC doesn’t always care which eye it hits. Sometimes it even hits the consumer for the purpose of consumer protection.
Take the May 2022 application by mobile phone companies Telstra and TPG to merge part of their operations. This application was refused by the ACCC and, on review of that decision, by the Australian Competition Tribunal.
This decision was made despite many letters written by local councils and customers in regional areas, most of whom supported the plan as a solution to poor mobile coverage. These voices were drowned out by competing telcos, particularly Optus. A shared sentiment in these letters was that people are sick of high prices due to a lack of competition, and bad reception that impacts small businesses, farmers, and everyday life in regional towns.
Maybe if this plan went ahead, pricing would not change for the better – but it is certain that the cost would be less offensive if people had better mobile coverage in exchange for their hard earned money.
So what was the plan?
The idea was that TPG and Telstra would operate a shared mobile transmission network. This network would cover more people in the bush.
More specifically, TPG would let Telstra use transmission spectrum held by TPG, while Telstra would let TPG use its transmission towers in the Regional Coverage Zone. TPG would transfer 169 towers to Telstra, and take down towers that doubled-up with Telstra towers.
About 17 per cent of the population lives regionally. TPG covers 96 per cent of that population, but if the deal was approved this would become 98.8 per cent. Telstra’s immediate gain would be cost savings.
The deal has been blocked, leaving Telstra and TPG disappointed, but Optus thrilled.
Competition in the market
According to the Australian Financial Review, Telstra has about 43 per cent of the mobile market. TPG has less than 20 per cent, and Optus just over 30 per cent.
It is easy to see that by allowing Telstra and TPG to merge for their bush mobile operations, Optus would find it harder to compete against them in the bush.
Optus would find it harder to justify investment in mobile transmission towers.
The question is, now that the Telstra/TPG deal has been blocked, will Optus actually invest in the bush, or will it simply let things be?
The Australian Financial Review reports Telstra CEO as saying that there are two ways in which the fast-growing demand for mobile services in the bush can be met.
- One is to buy more spectrum – the radio waves that transmit data and calls. Telstra is effectively banned from buying spectrum because it is such a big player already.
- The other is to build more transmission towers, but it isn’t always viable to do so for anyone – Telstra, TPG or Optus.
Clearly, the only immediate way for mobile services to improve in the bush is for the spare spectrum owned by TPG to be used. This is what the deal between Telstra and TPG was about.
The not-so-immediate way for bush mobile services to improve is for Optus to step up and invest in spectrum (possible) and mobile transmission towers (economically unviable). Optus needs to do both for things to improve in the bush.
An optimist would say that the decision to block the Telstra/TPG deal puts Optus in a prime position to strongarm the Australian Government into subsidising its investment in mobile transmission towers.
A pessimist would say that Optus has no incentive to move quickly now that its competitors have been stymied by the regulator. Optus has all the time in the world to decide what, if anything, it’s going to do in the bush.
That’s why the consumer protection regulator’s decision looks like one in the eye for the consumer, the regional consumer.
Contact the ACCC here.