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Optus appeals to ACCC over Telstra-TPG deal

Follows Telstra and TPG signing a 10-year network-sharing partnership.
Kelly Bayer Rosmarin (Optus)

Kelly Bayer Rosmarin (Optus)

Optus has hit back at Telstra’s proposed network-sharing agreement with TPG, claiming it will “undermine” and “lock out” any further regional investment from other players. 

In a submission to the Australian Competition and Consumer Commission (ACCC), Optus called the deal a “uniquely one-sided network sharing arrangement”. 

Announced in February, the deal will allow TPG access to 3,700 of Telstra’s mobile network assets, while TPG will decommission around 725 mobile sites it currently operates within Telstra's coverage area.  

Meanwhile, Telstra will obtain access to and deploy infrastructure on up to 169 of TPG Telecom’s existing mobile sites as well as some of its existing 4G and 5G spectrum in regional areas. 

Optus however claimed the deal will effectively “eliminate choice” in regional Australia and substantially weaken Optus in regard to investing in regional areas. 

“Should the proposed transaction proceed, this further strengthening and entrenching of Telstra’s dominance in regional areas will mean that no rational competitor will be able to justify further significant investment in regional areas,” the submission claimed.

“This would further entrench the market distortion that has already been created by the decision to ban certain existing equipment vendors for national security reasons, which has disproportionately affected Optus and TPG and benefited Telstra.” 

According to Optus’ submission, the “merger will not result in better outcomes for consumers, nor will it enable TPG to effectively compete with Telstra”.  

Arguing that the network sharing agreement will harm telecommunications competition by creating “a dependency for TPG on Telstra”, Optus claimed the proposed agreement will impose limitations on the basis by which TPG can compete and ensures Telstra has control over network decisions and pricing levels.  

“On the contrary, it will strengthen Telstra, weaken Optus and the competitive pressure that Optus imposes on Telstra and reduce the resilience and in some cases to the point where there may be no coverage in times of natural disaster,” the submission said. 

Optus further argued that the deal would result in higher prices, lower communications investment, lower network and service quality and fewer choices for consumers in regional Australia.  

Telstra’s position will meanwhile be enhanced as it received revenue from carrying TPG’s traffic and its “unprecedented control” over mobile spectrum in regional Australia, the submission claimed. 

“The proposed MOCN [multi-operator core network] arrangement is one-sided with Telstra retaining control, removing TPG’s ability to be an effective competitor, especially in the regions.” 

In a statement, Telstra hit back at Optus’ claims, saying the network merger would be “hugely positive for regional Australia”. 

“At a time when demand for data is growing rapidly, it will unleash new mobile capacity in regional Australia through use of under-utilised spectrum in thousands of regional sites, as well as enabling new competition and choice,” a spokesperson said. 

“This deal will enable regional Australia to be more connected than ever before. Optus’ only reason for opposing the deal is self-interest – it would rather protect its own position than support an innovative deal to provide more capacity and competition in regional Australia.” 

Meanwhile, James Rickards, TPG Telecom general manager of external affairs, accused Optus of "twisting the facts to stop what it knows is a pro-competitive change to the mobile market". 

"TPG’s entire reason for this deal is to increase the size of its network so it can win customers from both Telstra and Optus, meaning all mobile consumers will benefit from greater choice and competition," he said.

"Under the network sharing deal, we will go from having 5,500 sites with only a small number in regional areas, to around 8,500 mobile sites across metro and regional Australia connected into our core network where service quality, pricing and product differentiation are all controlled by us."

Rickards added that Optus’s "threat to not invest in regional Australia because of the arrival of a third provider does not make sense".