The Australian Competition and Consumer Commission (ACCC) has initiated an investigation into the proposed network and spectrum sharing arrangement between Optus & TPG.
This collaboration, intended to enhance regional mobile service coverage, is under scrutiny to determine its impact on competition within the Australian telecommunications market.
The Proposed Arrangement
The agreement, referred to as the Multi-Operator Core Network (MOCN) commercial arrangement, involves three key components:
- MOCN Services Agreement: Optus will provide TPG with access to its regional radio access network (RAN) which is roughly 2,444 Optus mobile sites, for 4G and 5G services. This agreement spans 11 years with an option for TPG to extend it by an additional five years.
- Spectrum Authorisation Agreement: TPG will authorise Optus to use specific spectrum bands in defined regional areas, pooling this spectrum for shared use.
- Site Transfer Agreement: TPG will transfer certain mobile sites to Optus and decommission the remaining sites within the coverage area.
This partnership will significantly enhance TPG’s coverage in regional Australia, boosting its reach from 95.4% to approximately 98.4% of the population.
The arrangement covers services such as voice, data, SMS, fixed wireless, and Narrowband Internet of Things (NB-IoT) for both consumer and enterprise customers.
What Does The ACCC Look At?
The ACCC’s investigation will focus on several critical aspects to assess the potential effects on competition:
- Competition in Mobile Services: The ACCC is seeking insights on how mobile service providers currently compete and whether the proposed arrangement will impact competition based on price, network coverage, and service offerings.
- Impact on Price Competition: The potential effect of the arrangement on pricing strategies within the mobile services market.
- Non-Price Competition Aspects: Evaluation of the arrangement’s influence on network coverage, speed, capacity, customer service, and product offerings.
- Current and Future Competition Between Optus and TPG: Analysis of how closely these companies compete currently and their potential competition in the absence of the proposed arrangement.
- Expansion Capabilities of Competitors: Likelihood of other competitors expanding their network coverage and quality to match the services provided by Optus and TPG under the new arrangement.
The ACCC is inviting submissions from all parties by 4pm, 26 July 2024, to gather comprehensive feedback on these aspects.
Background and Precedents
This proposed collaboration follows a similar attempt by Telstra and TPG in 2022, which was rejected by the ACCC due to concerns about substantial lessening of competition.
The Telstra-TPG arrangement involved spectrum sharing and the transfer of mobile sites, akin to the current proposal between Optus and TPG.
The Australian Competition Tribunal upheld the ACCC’s decision, further emphasizing the need for rigorous scrutiny in such arrangements.
Potential Outcomes
If the ACCC finds that the Optus-TPG collaboration could substantially lessen competition, it will reject the proposal, thus preserving the competitive dynamics within the market.
Conversely, approval of the arrangement could enhance regional coverage and potentially offer better service offerings for consumers.
For far too long, regional customers have been inadvertently network-locked to Telstra, as it has been the only serviceable provider.
This situation has limited their choices for pricing. A new potential partnership could offer these customers cheaper alternatives with decent coverage.
Ultimately, the ACCC’s final decision will depend on detailed analysis and feedback from stakeholders, balancing the benefits of improved coverage against the risks to competitive market dynamics.
