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Telstra-TPG regional network deal blocked by ACCC: Why that’s good news for you

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After reviewing the potential benefits and negative impacts of the deal, the ACCC has decided not to grant authorisation to the 2 giants.

The Australian Competition and Consumer Commission (ACCC) has determined that Telstra and TPG Telecom's 10-year network-sharing agreement in regional Australia cannot go ahead.

While conducting its own extensive investigation and public consultation, the ACCC concluded that the agreement would:

  • Substantially lessen competition and leave mobile users worse off; or
  • The detriments would outweigh any benefits

ACCC commissioner Liza Carver said, "We examined the proposed arrangements in considerable detail. While there are some benefits, it is our view that the proposed arrangements will likely lead to less competition in the longer term and leave Australian mobile users worse off over time, in terms of price and regional coverage."

Why is this good news?

Competition is generally good for consumers. Both new and existing smaller providers don't have to worry about network overheads and are able to offer cheaper deals to customers.

Telstra is already the largest network operator in Australia and the ACCC found its access to TPG's spectrum in regional and urban fringe areas would've made it harder for newcomers to enter the market and reduce rivals' ability to compete.

The ACCC received over 170 submissions, 40 witness statements and expert reports including confidential information from carriers themselves.

Based on this information, the ACCC felt that there was a high risk that the agreement going ahead would lead to TPG and Optus investing far less in critical infrastructure in regional Australia in the future.

What would have happened if the agreement went ahead?

We'll spare you the technical details and get into how the deal would have impacted regional coverage.

  • Vodafone would have gone from the third-largest mobile network to the second. Its coverage would have increased from covering 96% of the population in regional and urban areas to 98.8%. This would have put it ahead of Optus which covers 98.5% of Australians.
  • All TPG customers would've benefited from additional coverage. This includes Vodafone, TPG, iiNet, felix and Lebara customers who likely don't get the same level of service in regional Australia as they do in the metro areas.

What did Telstra stand to gain?

Australia's largest telco would've gained access to TPG's 4G and 5G networks, allowing it to expand its reach. Plus, TPG would've decommissioned its network Regional Coverage Zone meaning more power to Telstra.

It's not over: Telstra and TPG to fight ACCC decision

Both Telstra and TPG have indicated they have plans to appeal the ACCC's decision.

"This decision is a massive missed opportunity for the people, businesses and communities of regional Australia," Telstra CEO Vicki Brady said.

"This innovative agreement will deliver real competition-driven benefits for regional Australia, something recognised by the ACCC in its determination."

TPG Telecom chief executive, Iñaki Berroeta, said "The ACCC's decision to deny the TPG TelecomTelstra network sharing arrangement is a missed opportunity to deliver greater competition and choice for the people of regional Australia.

Meanwhile, Optus has opposed the deal since it was announced back in February.

Optus CEO Kelly Bayer Rosmarin said, "By knocking back this deal, the ACCC has helped ensure that our regional communities will continue to benefit from competition in a sector that is fundamental to our digital economy and future prospects."

In July, Optus vice president for regulatory and public affairs Andrew Sheridan said, "An arrangement involving the dominant provider in a 3-player market will not preserve competition. It creates an environment that isn't fair to competition and provides Telstra the tools to manipulate and control the market. The proposed arrangement benefits the already-dominant player."

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