As with many things in a continent like Australia, there’s a significant variance between what’s available in metropolitan (and outer metro) areas, versus what’s available in regional and rural areas, and mobile networks are one such area where the divide is real and significant.
In metro areas, we are spoiled for choice, with access to three major carriers and a good number of virtual network operators which piggy-back onto these carrier networks. However, once you go outside the metropolitan areas, quickly those network offerings start to reduce, until you end up in some regional areas where there might only be two networks operating, or worse, just one.
All too often, that “one network operating” is actually Telstra, which means that unless you’re a Telstra customer, or a customer of one of Telstra’s MVNOs that uses their network, you’re generally out of coverage altogether, unless your chosen carrier has a roaming agreement with Telstra. Vodafone does have (or did have) network agreements to roam onto Telstra’s network in some places, and it roams onto Optus in others, but these agreements are inconsistent at best, and don’t generally result in favourable mobile access anyway.
An argument for domestic roaming
Australia’s Competition and Consumer Commission is about to launch an inquiry into regulated domestic roaming, and Vodafone is making its case in support of the move. Cautiously, the case for regulated domestic roaming makes more sense than rejecting it, and here’s why.
Telstra has been the beneficiary of significant quantities of taxpayer funds over the years, from the time when it was a government-owned monopoly service provider, and even in more recent years where it has transitioned to majority private (non-government) ownership. As a result, Telstra has — unquestionably — the largest and broadest mobile coverage once you leave the metropolitan and major regional areas, and in many places, it’s the only coverage.
If money were no object, Vodafone and Optus would almost certainly expand their coverage into these areas to compete, but the playing field isn’t exactly level; Vodafone and Optus would have to spend their own money, whereas Telstra was able to fund much of this expansion with taxpayer’s funds, and equally, its own funds (because other areas of its operations were funded publicly).
However, money is an object, and because there’s an argument that Telstra’s network exists by virtue of public, taxpayer funding, in the interests of fairness, others should be allowed access to those network areas on competitive terms. At present, there’s no reason Telstra can’t permit carriers access to its network in particular areas, but there’s also no incentive for Telstra to do so on reasonable, competitive terms — there simply is no competitor for these carriers to turn to, which would drive prices down.
A regulated service declaration from the ACCC would mandate fair market access to these network areas, and the winner at the end of the day is the consumer, being offered more choice for their mobile services outside the big smoke.
An argument against regulated domestic roaming
That we can see, the major argument against this approach is from Telstra, and basically it is that the other carriers shouldn’t get a free ride. Telstra’s executives have variously made the following arguments:
“Regulated roaming would mean there was virtually no reason for any mobile phone company to invest in new coverage or better technology.”
– Tony Warren, Telstra Corporate Affairs, Group Executive, Blog, Telstra Exchange, September 2016
Of course, these arguments are rather easy to rebut. For starters, a regulated roaming agreement is more likely to encourage investment in new coverage and technology, because carriers like Optus and Vodafone would not be forced to spend money on (arguably unnecessarily) duplicating a network that’s already there. This would free up their capital to look at newer technologies and improving coverage where they can already — and fairly — compete.
“One can understand why some competitors would lobby for this – it would be a free Christmas present.”
– John Mullen, Telstra Chairman, Annual General Meeting, October 2016.
Telstra would take this viewpoint, but again, it overlooks the free Christmas presents that Telstra received for many, many years before it transitioned to private ownership. Of course Telstra — and it’s private owners / shareholders — would be upset about having to potentially wear the cost (read: not be able to charge a premium) of allowing carriers access to its network in regional areas, but if we’re being perfectly honest, a modicum of due diligence would have revealed that something like this was always a possibility.
In a truly free and open market, providers can charge what they like, or what the market will pay. That’s one of the tenets of our capitalist economy. However, ours is not a truly free and open market, because Telstra started with a significant publicly-funded advantage that the other players did not, and could not access. Thus, we — as the public — are entitled to expect some form of government intervention here to even up the playing field. Telstra are — to my mind — ignorant to argue otherwise.
“One of our competitors is seeking regulation to close this competitive gap by cheaply riding on our network to avoid spending their own money.”
– John Mullen, Telstra Chairman, Annual General Meeting, October 2016
Again, the only reason Telstra has been able to spend what it has in the regional and rural areas is because of the significant advantages it enjoyed from public ownership, and the advantages it now enjoys in its current form having inherited significant infrastructure from the public purse.
I can well understand Telstra and its shareholders being concerned about a likely drop in some earnings if other carriers gain regulated access to its network, but if Telstra really is as concerned about fair competition as it makes out in its arguments, it needs to consider what unfair advantages it is the happy recipient of.
Vodafone have said it most eloquently in their pitch, as set out by Dan Lloyd, Corporate Affairs Director:
If infrastructure is paid for or subsidised by the taxpayer and industry, which is the case with the incumbent’s mobile and fixed networks in Australia, there is a strong argument that it should be open-access.
We can only agree. Telstra has been very protective of the assets it inherited from public ownership, and has benefited immensely from some fairly ridiculous decisions in the past (some of the moves around the NBN are just woeful). Customers in regional and rural areas are starved for choice in mobile networks, and are often forced to pay Telstra’s premium prices for a network that increasingly (in recent years, at least) delivers a less than premium experience.
Let’s even up the playing field, and force Telstra to compete. Consumers win, the mobile industry wins, and ultimately Telstra wins in the long run too. It can have customers who want to be Telstra customers, rather than those who have no choice.