The Australian Competition & Consumer Commission (ACCC) has blocked a proposed network sharing agreement between Telstra and TPG, saying it would likely reduce competition in the mobile space.
"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," said ACCC Commissioner Liza Carver.
"Any reduction in competition will have very wide-ranging impacts on customers, including higher prices and reduced quality and coverage."
As part of the network sharing agreement, Telstra was set to give TPG access to the majority of its in regional network spectrum. This would have increased TPG's coverage from 96% of the population to 98.8%. This would have put it on par with Telstra MVNOs. Telstra itself has a slightly larger footprint, covering 99.5% of the population.
In exchange, TPG would decommission or transfer its mobile sites in regional and urban fringe areas to Telstra.
Carver says the arrangements would have had short-term benefits in improving TPG's network coverage, but would lessen infrastructure-based competition and entrench Telstra's dominant position in the mobile market.
"While Telstra and TPG have claimed the agreements will immediately lead to more choice for customers and better coverage for TPG customers, this misses the more significant impact on consumers which is that the reduction in competition in the longer-term will likely lead to higher prices, less innovation and quality of service, and less competitive pressure to expand and improve networks," said Carver.
TPG says it will carefully review the ACCC's decision. It is preparing an application to the Australian Competition Tribunal.
"We are disappointed the ACCC has chosen to ignore the overwhelming evidence submitted from leading economists, competition experts and regional communities outlining the benefits of the proposed arrangement to competition and consumer choice," said TPG CEO Iñaki Berroeta.
"If it had been authorised, the arrangement would have freed regional Australia from its current mobile duopoly, and the increased competition from TPG would have placed downward pressure on mobile pricing."
Telstra will also appeal.
"This decision is a massive missed opportunity for the people, businesses and communities of regional Australia," said Telstra CEO Vicki Brady.
"Despite today’s disappointing news, I’d like to thank all the people who recognised the benefits this agreement could bring and spoke up in favour of it. We will keep pushing for the right outcome for you."
Optus, which prominently opposed the network sharing agreement, welcomed the ACCC's decision.
"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," said Optus CEO Kelly Bayer Rosmarin.
If the agreement went into effect, TPG would have overtaken Optus' coverage footprint. Optus' mobile networks currently cover 98.5% of the population.
The ACCC previously opposed the TPG-Vodafone merger, but the Federal Court ultimately allowed it.
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