Australian regulators grapple with fallout of rejected Telstra-TPG deal

The Australian telecom regulator is expected to consider changes in spectrum policy in the wake of the rejection of the proposed Telstra-TPG network sharing arrangement.

Telstra, the local industry heavyweight, is leading the calls for more telco spectrum, which it argues is at the heart of the problem in rural areas. But critics say the whole competition regime in regional Australia needs a drastic revamp.

Earlier this week the Australian Competition Tribunal (ACT) upheld competition regulator ACCC's rejection of the partial merger, endorsing the ACCC ruling that it would likely reduce competition and that the benefits would be outweighed by the disadvantages.

Under the deal, Telstra would have merged its rural access networks, covering 17% of the total population, with TPG, the no.3 mobile operator.

TPG would have transferred some of its spectrum to Telstra and would have shut down most of its existing rural basestations. The telcos argued the arrangement would have grown connectivity and improved the efficiency of spectrum utilization.

Telstra CEO Vicki Brady said following the decision the telco would "carefully consider" its response. It has the right to appeal, but that would be an act of great optimism. Given the failed appeal and the wide industry opposition, the deal is all but dead in the water.

However, Brady called on the government to rethink its rules on operator access to spectrum "in light of the ever increasing demand for mobile data."

Calls for more infrastructure sharing

In a statement to Light Reading, Communications Minister Michelle Rowland said she could not comment while Telstra and others were still weighing their next steps. She also said she could not pre-empt the outcome of a review of spectrum and licensing arrangements now being carried out by industry regulator ACMA.

She said the ACMA was examining the current spectrum management rules and would consider whether "alternative arrangements could better facilitate the efficient use of the spectrum."

But others think the problem is about competition, not spectrum. Industry body Commpete, which represents smaller telcos, applauded ACT's ruling against the Telstra-TPG deal, which it said "would have handed a dominant provider control over mobile pricing, service availability and service standards."

But Commpete chair Michelle Lim called on the ACCC to "declare" mobile access, which would allow non-dominant operators to access existing infrastructure on reasonable terms. Another skeptical voice, Mark Gregory, Associate Professor at RMIT University, said the ACCC is constrained by having to enforce competition, regardless of whether duplicated infrastructure is viable.

In that situation it was appropriate that the government should step in to declare roaming in regional Australia to facilitate infrastructure and spectrum sharing. He said that the states had already agreed they would like to see the federal government mandate neutral host funding for mobile networks.

But this would not be possible "until the government moves forward with a structural realignment of how mobile is delivered in regional and remote areas," he said.

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— Robert Clark, Contributing Editor, special to Light Reading