Unfortunately, there is a telecommunications divide between the cities and our regional and rural areas. Those living in Australia’s major cities have access to three world-class 4G networks and the benefits of strong competition. Many Australians living in regional and rural areas don’t have access to reliable mobile services, or don’t have a choice of provider.
As we all know, Australia is a large country with low population density in many places. Due to the high cost of mobile network deployment, it is simply not economically viable to build more than one network in many rural and remote areas. The incumbent has largely been able to build its regional mobile and fixed networks through significant taxpayer and industry funding and subsidies over many years.
Each year, almost $300 million of taxpayer and industry contributions go to the incumbent under the Universal Service Obligation for its regional telecommunications networks. In addition, it has received hundreds of millions of dollars through federal and state government programs to subsidise its investment in regional mobile networks.
The solution to ensuring people in regional Australia have access to the same competitive services as their city counterparts is to enable domestic mobile roaming.
This would essentially see mobile providers pay each other so that their customers can use each other’s networks, effectively subsidising new network build so that the coverage can be expanded.
Australian taxpayers are the biggest investors in regional telecommunications networks, so there is a strong argument for it being open to all providers through regulated domestic roaming.
It is crucial that regional consumers are front and centre of this debate as there are many benefits which domestic roaming can deliver for them. At Vodafone, we are proud to be standing up for customers by fighting to close the telecommunications divide.
A move towards increased choice
The Australian Competition and Consumer Commission (ACCC) has commenced an inquiry into regulated domestic mobile roaming.
This is the not first time this issue has been raised. The ACCC previously held similar inquiries in 1998 and 2005, but on both occasions decided against regulation because commercial roaming agreements were put in place between mobile providers under the threat of regulation during the inquiry. The incumbent, which currently has a monopoly of 1.4m sq km, does not currently engage in any significant domestic roaming agreement with any other mobile provider.
The ACCC’s Chair Rod Sims recently said:
“A lot has changed since 2005. We do think it’s time we look at the issue again in detail, and examine some of these key matters, including consumer demand, network investment, and barriers to competition. We consider the most efficient way to do that is to consider all of the issues carefully through a declaration inquiry.”
If the ACCC decides to regulate domestic roaming this time, it would mean mobile service providers, such as Vodafone, would be allowed to pay for access to Australia’s incumbent telecommunications provider’s existing network infrastructure, thereby immediately delivering substantial benefits to all Australians, especially choice to those in regional Australia for the first time.
Regulated domestic roaming has operated very successfully for years in similar countries
The announcement of the ACCC’s inquiry has provoked some responses from the incumbent telecommunications provider which are nothing short of misleading.
“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
In reality, domestic roaming is common practice internationally for ensuring competition and choice in areas where there is no economic case to duplicate network infrastructure.
Domestic roaming operates successfully in many countries around the world through commercial agreements and is already regulated in most western countries with large land areas and/or low population densities including the USA, Canada, Spain, France, South Africa and New Zealand.
There is no evidence based on the experience in these countries that regulated domestic roaming results in a decrease in investment by the dominant operator or by industry overall. In fact, much of the data shows it has unlocked additional investment by all parties as they are cooperating to share the costs of infrastructure.
For example, three years before national roaming regulation was extended to data services in the United States, the average mobile industry capital investment was 13.2% of revenue. In the three years after the extension of national roaming, the average capital investment increased to 16.2% of revenue.
There is no such thing as a free ride
“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.
There is no such thing as free domestic roaming anywhere in the world. It’s a ridiculous concept.
If domestic roaming were to be regulated in Australia, the incumbent would be paid a fair wholesale rate, set by the ACCC, each and every time a customer of another provider roamed on its network. This would allow a reasonable rate of return on Telstra network investments.
Through domestic roaming, the cost of regional mobile infrastructure would be shared between two or more network operators, enabling all operators to invest in new sites, bringing coverage and competition to more Australians.
We have invested substantial sums of money wherever possible
“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
At Vodafone, we are proud of our significant investment in our network.
In recent years, we have expanded our coverage footprint by 40% with 4,000 site upgrades and 750 new sites – an investment of more than $3 billion.
What are people in regional Australia saying?
Organisations including the National Farmers’ Federation, NSW Farmers, the Victorian Farmers’ Federation, the Regional Australia Institute, the Broadband for the Bush Alliance, and the Council of Small Business Australia, as well as regional and rural MPs have welcomed the ACCC’s decision to consider regulating national roaming.
The Victorian Farmers’ Federation Vice-President Brett Hosking has said the declaration would encourage greater competition.
“ACCC declaration of domestic inter-carrier roaming would open up the nation’s mobile telecommunications market to true competition…We need competition, which will help break Telstra’s monopoly, end the duplication of the rural mobile network.”
– Brett Hosking, VFF Vice President, VFF Media Statement, 5 September 2016
The NSW Farmers President Derek Schoen has made similar comments:
“For too long rural Australians have seen a lack of competition result in poor service, poor pricing, and a low investment in regional telecommunications.”
– Derek Schoen, NSW Farmers President, Media Release, 2 June 2016
“With duplication of infrastructure generally not feasible, any incoming government should reconsider the introduction of mandatory mobile roaming across Australia through the ‘declaration’ of the service under the Competition and Consumer Act.”
– Derek Schoen, NSW Farmers President, The Land, 2 June 2016
Vodafone’s position on domestic roaming is very clear. 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.
There is no evidence based on extensive international experience that regulated domestic roaming results in a decrease in investment by the leading operator or industry overall. There is significant evidence that it unlocks additional investment.
We believe the ACCC’s inquiry should be viewed as an opportunity to consider if there is further room for improvement – a model that is a win-win for regional consumers and for mobile operators.
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