Experts warn mobile internet prices will rise if Telstra-TPG deal is approved

Australians could be charged more for their mobile internet if a proposed partnership between Telstra and TPG is approved by the consumer watchdog.

Telecommunications experts told The new daily newspaper that if the deal were approved, the two telcos would have too large a share of the regional mobile internet market and would therefore be able to set prices without fear of losing customers to competitors.

The proposed partnership would enable Telstra and TPG to leverage each other’s mobile network infrastructure in regional areas to deliver broader 4G and 5G services to each other’s customers.

But NBN Co said in a submission to the Australian Competition and Consumer Commission that since TPG does not currently have a large regional customer base, the sharing scheme could allow Telstra to evade competition restrictions and increase its market share in its regional coverage zone.

The RCZ encompasses regional and urban fringe areas and accounts for approximately 17 percent of the Australian population coverage.

Major retailers are getting bigger

Independent telecommunications analyst Paul Budde said that under the proposed network sharing arrangement, a TPG customer would have their mobile internet services automatically ported to Telstra if they enter an area not covered by the TPG infrastructure.

On the surface, he said sharing infrastructure between mobile internet retailers was a good thing, but not if the deal is exclusive between certain companies, such as the deal with Telstra and TPG would be.

Mr Budde said there should be a neutral infrastructure that can be used by all telcos, similar to how the NBN can be used by all internet shops.

Broad access to the NBN allowed smaller internet retailers to gain market share and put pressure on prices.

A recent ACCC report shows that the top three telcos Telstra, TPG and Optus lost market share in NBN’s wholesale market in the March quarter, while smaller internet retailers such as Aussie Broadband gained more customers.

“The NBN is a wholesale system and all retail service providers can use that network and build and offer their services online,” said Mr. Budde.

“That should be a goal [for the mobile network]†

Mr Budde said regional Australians will be most affected by the proposed partnership between Telstra and TPG as these markets face less competition than urban markets and therefore less downward pressure on prices.

Telstra already has a 48 percent share of the national market for postpaid mobile subscriptions and TPG/Vodafone has 18 percent.

In a blog post published on its website last year, Telstra also acknowledged that “it is often the only telco” available in regional areas.

What Telstra/TPG merger means for consumers

Former Internet Australia CEO Laurie Patton said major telcos like Telstra already have a “stranglehold” on the delivery of NBN services and that the last thing consumers need is fewer choices for their mobile internet.

He said there would be no room for price competition among mobile internet vendors if the existing “telco gorillas” continue to dominate the market.

No competition would mean that the big telcos can charge higher prices without fear of losing customers.

Mr Patton said this is “Economics 101”.

“As market concentration increases at the telco level, competition decreases and consumers are the most disadvantaged,” he said.

“If there are dominant players in the market, they will set the price.”

And regional customers will be “definitely” at a disadvantage, he said.

In its submission to the ACCC, NBN Co also expressed concern that telcos such as TPG are trying to lure NBN customers to their 5G services.

Mr. Patton said NBN Co should be given the first option to acquire unassigned 5G infrastructure to replace its underperforming fixed wireless network, especially in poorly maintained regional areas.

Telstra and TPG submitted their proposal to the ACCC on May 23, and the consumer watchdog has until October 17 to approve or reject the deal.

Leave a Comment