The Sydney Morning Herald launched an inquiry into Australia’s telco industry and their domestic mobile roaming services. Readers were asked if telco providers should “be forced” to share their network with competitors at commercial rates on the heels of the Australian Competition and Consumer’s (ACCC) probe into domestic roaming services. While competitors welcome the inquiry, Telstra’s 1.4 million shareholders aren’t as happy.
Telstra Chairman John Mullen recently told shareholders: “For those of you not aware, the declaration of domestic mobile roaming would allow our competitors to utilize the Telstra network in areas where we have invested and provide coverage and they have not. If the ACCC decides to declare mobile roaming, it would absolutely be at the expense of you, the Telstra shareholders.”
The ACCC, according to the Morning Herald, is thinking of “‘declaring’ wholesale domestic mobile roaming services,” which would force the network owner to provide access upon request. The ACCC could potentially set pricing and terms. A preliminary decision is expected in early 2017.
People in Telstra’s corner told the Morning Herald that telcos like Telstra and Optus make their profits from charging customers more for superior networks. Telstra’s decision to build towers in regional areas is more about “premium pricing” not “a community-minded commitment to ensuring regional Australians have decent coverage.” They want to continue to be a premium supplier with the best network, which was boosted in 2012, by the West Australian’s government’s $40 million award for 113 towers and $100 million of its own investment.
Telstra and Optus both have threatened, according to the Morning Herald, to stop building regional towers if other telcos use the network. Telstra is looking at income growth of five to nine percent, with earnings growth under five percent. Free cash flow will be around $4 billion.
Optus, which is owned by SingTel, spent $1.7 million last year on mobile infrastructure. The telco said if domestic roaming was a reality, it never would have invested so much.
Others say that customers are suffering financially because of the monopoly certain telcos have on regional networks, and that the telcos are gaining a higher rate of return than others in the world.
TPG, which has bought spectrum in Australia, told the Morning Herald that barriers for new mobile entrants are “extremely high.” The company “does not believe that it is likely that it will be able to successfully secure a commercially negotiated roaming arrangement with the current incumbent mobile carriers.”
October 19, 2016
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