Business Analysis

Collaboration between telco giants would be a huge boon for industry

By | | comments |
Infrastructure sharing between telco giants has frequently been rejected by the ACCC (Image by Dan Jensen)

Collaboration and infrastructure sharing are essential to improving coverage and competition in the telecommunications industry, writes Paul Budde.

THE AUSTRALIAN telecommunications industry has long been a source of contention between regulators, operators and consumers. In recent years, the focus has been on increasing competition and improving coverage, especially in regional areas. Two recent speeches from industry leaders have highlighted the need for collaboration and infrastructure sharing in achieving these goals.

Over the last 20 years, I have argued that there should be more sharing of telecoms infrastructure as it simply doesn’t financially stack up to keep overbuilding existing infrastructure. This was the case in relation to fibre optic networks. While a good plan was developed by the Government between 2005 and 2009 – which was supported by the industry and consumer organisations – the execution of that plan was appalling as a new government totally botched it up.

As a result, it might take till 2030 before we have a national fibre optic network. However, the principle behind it of having one national fibre optic still stands. We also don’t have multiple electricity, water or gas systems come to our premises.

In relation to mobile infrastructure, I have argued that in areas where infrastructure-based competition doesn’t make sense (regional and rural area), we should share mobile infrastructure. This has always been rejected by the industry with the support of the Australian Competition and Consumer Commission (ACCC). The regulator is still stuck in the mode of promoting infrastructure-based competition, while the industry has started to share infrastructure-based systems including cloud computing, data centres and dark fibre optic networks.

At last, there are some changes from one of the fiercest opponents of mobile infrastructure sharing — Telstra.

In a presentation at the CommsDay Summit in Sydney, Telstra CEO Vicki Brady called on the Government, industry and regional communities to collaborate in supporting temporary roaming during emergencies, such as natural disasters. She acknowledged that Telstra, as the provider with the largest mobile coverage in regional areas, has an important role to play in ensuring access to communications during times of crisis.

However, she also noted that there are limits to the capacity of a single mobile network to handle additional traffic and that infrastructure may be destroyed during such events.

Brady argued that the industry needs to embrace open application programming interfaces (APIs) and explore more opportunities for collaboration in order to better serve Australians. She acknowledged that a mindset change is needed, from defending what we have to thinking about the larger opportunity we can create by working together. By collaborating and sharing infrastructure, the industry can create a more robust and dynamic market where customers benefit.

This call for collaboration was echoed by TPG CEO Iñaki Berroeta in his speech at the same conference. Berroeta blasted three decades of “regulatory and policy failure” that have left Australians in regional areas “desperate for competition and choice”. He argued that attempts to improve regional coverage have been blocked at every turn, citing the rejection of domestic roaming and network-sharing deals between operators.

Berroeta argued that collaboration and sharing are essential features of every telecommunications market, and that without them, the system doesn't work. He noted that the mobile market in regional areas is currently a duopoly at best and a monopoly in some areas, and that competing on regional coverage when there is no opportunity to win is not a feature, but a bug in the system. He called for a bold approach that breaks the shackles of old-fashioned regulation and embraces new, innovative solutions that truly serve regional areas.

Both Brady and Berroeta's speeches highlight the need for collaboration and infrastructure sharing in improving coverage and competition in the telecommunications industry. By working together, operators can co-invest in infrastructure, reduce duplication and ultimately provide better services to customers.

Infrastructure sharing is not a new concept in the telecommunications industry. Many operators around the world already share infrastructure to reduce costs and improve coverage. However, the practice has been slow to take hold in Australia due to a lack of regulatory support and resistance from incumbent operators.

The ACCC has been a key player in objecting infrastructure sharing in the telecommunications industry. It rejected a proposal by TPG and Vodafone to build a new mobile network in Australia, citing concerns that it would reduce competition. The ACCC also rejected a proposed network-sharing deal between Telstra and TPG, arguing that it would harm competition and reduce incentives for infrastructure investment.

My argument here has been that the focus of competition regulation should be changed from infrastructure-based to services-based. I objected to the TPG-Telstra merger for the reason that we first need to change the regulatory regime and create a levelled playing field on which infrastructure sharing can be developed. Once that is in place, mergers such as the one between Telstra and TPG can be much better judged.

There have been some recent positive developments. In 2019, the ACCC approved a proposal by Vodafone and TPG to merge, creating a stronger third player in the market. The ACCC also approved a proposal by Optus and Vodafone to share 5G infrastructure earlier this year, a move that is expected to reduce costs and improve coverage.

Despite these developments, there is still a long way to go in terms of infrastructure sharing and collaboration in the Australian telecommunications industry. The industry needs to embrace open APIs and work together to develop domestic standards and technology frameworks that support collaboration. Regulatory barriers also need to be addressed to encourage more infrastructure sharing and investment.

Paul Budde is an Independent Australia columnist and managing director of Paul Budde Consulting, an independent telecommunications research and consultancy organisation. You can follow Paul on Twitter @PaulBudde.

Related Articles

Support independent journalism Subscribe to IA.

 
Recent articles by Paul Budde
Artificial intelligence opening new business models

Artificial intelligence is opening up opportunities for businesses to embrace new ...  
NBN making progress but still paying for political footballing

While Australia's broadband network is finally achieving positive developments, it ...  
Enhanced NBN connectivity will provide economic and social benefits

In recent years, Australia has witnessed a profound transformation in its digital ...  
Join the conversation
comments powered by Disqus

Support Fearless Journalism

If you got something from this article, please consider making a one-off donation to support fearless journalism.

Single Donation

$

Support IAIndependent Australia

Subscribe to IA and investigate Australia today.

Close Subscribe Donate