The sale of mobile towers by Australia's three mobile network operators to large specialist tower companies has changed the structure of the mobile telecommunications industry and made the regulatory regime for tower access no longer fit for purpose, the ACCC's Regional Mobile Infrastructure Inquiry final report has found.
The ACCC was asked by the Australian Government to inquire into access to towers and other infrastructure used in the supply of mobile services in regional areas. The inquiry looked at many factors that affect the mobile network operators' (Telstra, Optus and TPG Telecom) incentives to invest in providing greater or improved mobile coverage.
The final report has 20 findings on issues relating to access to mobile towers, the regulatory framework, consumer experiences and the feasibility of temporary mobile roaming during natural disasters.
It explains that greater mobile coverage usually requires a mobile network operator to build a new tower or mount mobile equipment on an existing tower owned by another party, known as co-locating. Co-location is typically cheaper for mobile network operators than building new towers.
While having tower companies independent from mobile network operators should generally create incentives for tower operators to increase their revenue through increased co-location, pre-existing commercial arrangements appear to be limiting this.
"Telstra, Optus and TPG Telecom still drive communications investment decisions in regional, rural and remote Australia as the tower companies only build new towers when they have commitments from the network operators to use them," ACCC Commissioner Anna Brakey said.
"Each of the three mobile network operators sold their tower portfolio to a separate tower company. This has created a strong bilateral contractual relationship between the old owner and the new owner, which can create restrictions and impact whether infrastructure sharing options are pursued."
These relationships and the remaining vertical integration between Telstra and the company it transferred its towers to, Amplitel, means it is not yet clear whether the sale of their towers will make it easier for mobile network operators to provide greater mobile coverage in the future.
A consequence of the change in mobile tower ownership is that the regulatory regime, including the Facilities Access Code administered by the ACCC, is no longer fit for purpose, as it does not apply to all the major companies that now have towers.
"We heard concerns from some in the industry that the current regulatory regime does not enable efficient tower access. This is understandable given the legislation does not apply in the same way to the tower companies who now own or operate most of the towers in Australia," Ms Brakey said.
Competition key to regional mobile coverage expansion, but Telstra has existing advantage
The ACCC's inquiry found that maintaining and gaining market share is a key driver for mobile network operators to expand coverage in regional and remote areas, where it is more costly to deploy new mobile infrastructure.
Telstra, Optus and TPG Telecom still decide where they want to provide geographic coverage, although the separate tower companies build and own the physical infrastructure.
The combination of Telstra's enduring competitive advantage in regional areas and generally lower population density raises barriers for Optus and TPG Telecom to expand their networks in regional areas.
"Mobile network operators have little incentive to invest in greater or improved mobile coverage in regional areas if doing so would not increase their market shares in the national mobile market, or is otherwise profitable," Ms Brakey said.
Regional, rural and remote consumers report lower quality mobile services
Consistent with previous inquiries, the ACCC heard concerns from regional, rural and remote consumers that they are being left behind for mobile connectivity. The report outlines consistent concerns about patchy coverage, difficulties interpreting and comparing coverage maps, as well as concerns that already congested networks will get worse as demand for data continues to grow.
"There is clear demand in regional, rural and remote areas for better mobile coverage and more choice of network operator. We also heard concerns about the impact of the looming 3G shutdown in 2024 and whether there will be equivalent 4G or 5G coverage," Ms Brakey said.
"Our report deals with one element of mobile coverage, which is tower access, but we heard from regional consumers that there are broader issues related to mobile services."
Temporary mobile roaming is technically feasible
The ACCC was also asked by the Government to examine the feasibility of temporary mobile roaming during natural disasters, or other emergencies. Where one network is down due to a natural disaster, a temporary mobile roaming capability would enable consumers to connect to any available mobile network during the specified event, for a limited time and in a limited geographical area.
The report explains that it is technically feasible to activate temporary mobile roaming; however, the mobile network operators would need to make changes to their business processes, network and operational systems.
Government agencies and industry would also need to develop frameworks and protocols with the mobile network operators for initiating and deactivating temporary mobile roaming.
Background
On 31 March 2022, the Australian Government directed the ACCC to conduct an inquiry in relation to:
- access to towers and associated passive and active infrastructure provided by telecommunications and other infrastructure providers in regional, rural, remote and peri-urban areas within Australia, that can be used in the supply of mobile telecommunications and other radiocommunications services; and
- the feasibility of temporary mobile roaming services to be provided during natural disasters and other such emergencies.
The ACCC's Regional Mobile Infrastructure Inquiry involved extensive consultation, including 59 submissions to the consultation paper, over 1,400 responses to a consumer survey and nine submissions to the draft report on preliminary findings.
On 18 April 2023, the ACCC released a draft report on preliminary findings.
