TPG Telecom and Telstra team up against Optus
TPG Telecom and Telstra have expressed disappointment in Optus’ social media campaign opposing their network sharing deal. Telstra and TPG announced their proposal to share mobile networks – a move that could boost TPG Telecom to second place ahead of Optus in the Australian telco market.
We previously reported that if the ACCC approves the network sharing, Vodafone will make strides in mobile coverage in regional areas, thanks to Telstra.
And Telstra, in return, will be rewarded with significant revenue over a decade and access to some TPG mobile sites.
Optus, as expected, opposes the network sharing deal. The telco has now made new attempts to ensure the deal never gets approved, including launching a social media campaign that TPG and Telstra described as “scaremongering.”
However, Optus isn’t alone in its opposition – the outgoing Australian Competition and Consumer Commission (ACCC) boss aired concerns about the deal, stating that it could cause price hikes for SIM plans by reducing competition.
This article covers the TPG Telecom and Telstra network sharing proposal, Optus’ opposition, and TPG and Telstra’s response.
Details about TPG Telecom and Telstra’s network sharing proposal
Although Telstra and TPG Telecom have proposed a network-sharing agreement, both telcos will remain independent if the ACCC approves the deal. Here’s what each telco gets if the ACCC gives the proposal the go-ahead.
- TPG Telecom will gain access to 3,700 of Telstra’s 5G and 4G networks in regional and urban fringe areas. This significant move could increase TPG Telecom’s coverage to 98.8 percent from its current 96 percent – a coverage boost that could unseat Optus as the second largest telco in Australia.
- On the other hand, Telstra could receive AU$1.6 billion to AU$1.8 billion in revenue during the 10-yearnetwork sharing deal. Telstra will also access some of TPG Telecom’s 4G and 5G networks and spectrum for more coverage and bandwidth.
TPG Telecom (Vodafone) has always wanted a piece of Telstra’s network
Telstra is the king of regional Australia, with coverage ranking as the widest in the country. Because other telcos view regional and rural Australia as less lucrative for investing in mobile network infrastructure, Telstra continues to hold its position in the area.
Other telcos like TPG Telecom would like a piece of the regional Australia pie. The easiest way to get said piece is by piggybacking on an established network’s mobile towers. And the most established network in regional Australia is Telstra.
Over the years, TPG Telecom (Vodafone) has coveted Telstra’s and Optus’ regional coverage, searching for ways to force those telcos to share what they’ve built. Telstra opposed all attempts until now.
For instance, Vodafone attempted to force Telstra and Optus to share their regional mobile networks with the government’s help in 2017, but the ACCC disagreed. The matter eventually ended up in federal court, where Vodafone lost.
Considering the past public disagreements between these telcos, their abrupt network sharing proposal marks an about-face. However, Optus continues to hold on to an opposing position.
Optus and the ACCC oppose the network sharing proposal.
As expected, Optus has opposed the TPG-Telstra network sharing agreement. Optus’ position is not surprising, considering the telco has the most to lose if it forfeits its place as the second largest telco in the country – a scenario that is likely if TPG Telecom gets access to Telstra’s network.
Optus claims the deal is one-sided, favoring Telstra much more than TPG Telecom. The telco submitted its written opposition to the ACCC, stating that if the proposal becomes a reality, it “will strengthen Telstra, weaken Optus and the competitive pressure that Optus imposes on Telstra.”
Optus believes that the deal could give Telstra up to 75% of the available spectrum, making them “unassailable,”, especially regarding 5G services and regional coverage.
ACCC boss Rod Sims also opposes the proposal, pointing out that “Vodafone, of course, is paying money to Telstra, so it has to recover that. We really need to understand the impact on prices because at the moment, you’ve got a bit of a competitive dynamic. We’re concerned about whether that dynamic will disappear.”
TPG Telecom and Telstra respond to Optus
TPG Telecom and Telstra have blasted Optus’ opposition to their agreement. The telcos have taken offense to Optus’ choice of words, accusing it of twisting and misinterpreting the terms of the proposal. TPG has also accused Optus of launching a ‘scaremongering’ social media campaign.
Optus referred to the network sharing proposal as a merger in its written opposition. TPG Telecom’s general manager has responded, stating, “Contrary to the assertions of Optus, this is not a merger,” and “To suggest otherwise is an attempt to mislead the public, industry and key stakeholders in the hope of creating controversy where none exists.”
Optus also launched a social media campaign which includes an advertisement that depicts kangaroos escaping bushfires. In response, Telstra and TPG Telecom released a statement referring to the campaign as using “scaremongering” tactics that are “emotionally manipulative” .According to both telcos, “Such posts have been recognised by the Australian public for exactly what they are: misguided and inappropriate.”
Final words – Public spats are mere grandstanding.
Most of what is being said between the three major telcos is hammered-up acting for newspapers. It has no more effect than making senior internal stakeholders smile in meetings with their public relations teams.
The actual substance of this issue will be carefully considered by the regulator and the ACCC, which had already voiced its grave reservations about the level of competition in Australian telecommunications long before this deal was announced. However, the implication for Australian consumers are substantial and need to be thought through soberly, not through headlines in newspapers.
What is at stake here is nothing less than the value of the brands involved. Vodafone has always been seen as a distant third in network coverage. No wonder Optus is keen to fight to prevent Big Red from usurping its “reliable second place” reputation, even though it means such ineffective means as newspaper squabbles.