Thursday, December 8, 2022
Published 3 Years Ago on Friday, Feb 14 2020 By Inside Telecom Staff
Australia’s telecom regulator tried to force fixed
broadband provider TPG Telecom to build mobile infrastructure and become the
country’s fourth MNO but – strangely enough – it was wrong.
On Thursday, the Australian federal court ruled in
favour of Vodafone and TPG’s plans to merge. This pushed aside the ACCC’s
worries that this move would impact market competition. Telecom companies announced
their intention to merge in August 2018, but last year the regulator tried to
block it and they were forced to take legal action.
The court ruled that the move is unlikely to
substantially lessen competition in the mobile market, either now or in future,
giving them green light for the pair to team up.
The telcos obviously welcomed the verdict and
simultaneously talked up the 5G investment plans it will facilitate; Vodafone
maintain that it will be able to accelerate its 5G rollout as a result.
first time, Australia will have a third, fully-integrated telecommunications
company,” said Iñaki Berroeta, CEO of Vodafone Hutchison Australia, to
give the operator its full title.
But the regulator is not happy.
consumers have lost a once-in-a-generation opportunity for stronger competition
and cheaper mobile telecommunications services with this merger now allowed to
proceed,” said ACCC chair Rod Sims.
The stronger competition he talks about seems
nothing but a pipe dream.
As it has reiterated many times, the ACCC opposed
the merger because it believed that if it did not hook up with Vodafone, TPG
would continue with the rollout of its own mobile network “and become an innovative and disruptive
competitor in Australia’s concentrated mobile telecommunications market.”
The main problem with this belief is that TPG had made
it pretty clear that it wouldn’t be rolling out its own network. Even if they
had, there is no evidence to suggest it would have succeeded in having any
substantial impact on the market.
The ACCC itself even notes, that Telstra, Optus and
Vodafone together have almost 90% monopoly of the mobile market. From this
view, there is a need for greater competition, but back in the real world, it
suggests an insurmountable challenge for a new player; even the third largest operator
Vodafone, is struggling to take on the main two, its market share stood at 19%
in June last year, according to the ACCC, flat compared with the previous year
and only one percentage point above its level in June 2017. Revenues are under pressure
and the business announced a loss last year.
TPG holds A$1.26 billion worth of mobile spectrum,
according to the ACCC, and began rolling out a small cells-based network in
2017 that it said, gave it an upgrade path to 5G. It called a halt to the build
a year ago, attributing its decision to the Australian government’s ban on the
use of Huawei equipment for 5G, although clearly, the proposed Vodafone tie-up
played a critical role.
The ACCC insists that TPG could overcome what it
described as “technical and commercial challenges” and carry on with
the network build…but ultimately, it is unable to force the telco to carry on
And that’s probably a good thing for Australia.
You could argue that a four-player market would lead
to greater choice and lower prices for consumers, but the more likely outcome
would be a market with two dominant operators and two struggling to stay
afloat. A stronger third operator at least has a chance to compete effectively.
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