The ACCC will not stand in the way of Optus and TPG’s mobile network and spectrum sharing despite blocking a similar agreement between Telstra and TPG
Optus and TPG have made three agreements relating to the provision of mobile services outside of major cities
On 5 September 2024, the Australian Competition and Consumer Commission (ACCC) announced that it would not be seeking to prohibit the proposed regional mobile network and spectrum sharing agreements between Optus and TPG Telecom. Optus and TPG – the second and third largest mobile operators in the country – have entered into three interrelated agreements:
A Spectrum Authorisation Agreement: TPG will authorise Optus to use its spectrum in the 700MHz, 1800MHz, 3.6GHz and 3.7GHz bands within defined regional areas (i.e. areas beyond the major cities of Brisbane, Melbourne and Sydney);
A Multi-Operator Core Network (MOCN) commercial arrangement: Optus will engage in active mobile network sharing with TPG in certain regional areas, which cover around 17% of the population; and
A Site Transfer Agreement: TPG will transfer to Optus or decommission a number of its existing mobile sites within the area agreed by the parties.
The agreements will last for an initial 11-year term, although TPG has an option to extend them by five years. TPG and Optus will continue to operate separate mobile networks in metropolitan areas (where 81.6% of Australia’s population live).
The ACCC considers the agreements will improve TPG’s coverage in regional areas, while supporting Optus’s 5G deployment
The ACCC has considered the impacts of the agreements on competition for retail and wholesale mobile services in Australia, ultimately finding that they are unlikely to substantially lessen competition, in particular infrastructure competition from TPG. According to Philip Williams (Commissioner, ACCC), the agreements will allow TPG to provide better coverage in regional areas, which will likely enhance its ability to compete while improving choice for consumers. Williams added that as a result of gaining access to TPG’s spectrum, the agreements are also likely to support Optus’s 5G rollout in smaller towns and cities. The ACCC stated that the competition impacts of the agreements are likely to be limited to geographic areas where TPG is not currently a significant competitor and is unlikely to become one in the future. Given that TPG currently has significantly less infrastructure and coverage in regional areas compared to Telstra and (to a lesser extent) Optus, the regulator considered that the improvement in TPG’s services during the term of the agreements is likely to be greater than what the operator could have achieved on its own.
The agreements are not expected to have a material effect on competition, but the regulator will be tracking developments closely
During the review, stakeholders proposed a range of measures to improve mobile services in regional areas, including suggesting that Optus and TPG should provide open wholesale access to their networks, divest spectrum and be obliged to make investments in certain locations. According to Williams, policies and regulations that promote competition in the mobile market in regional areas can help deliver higher quality services and lower prices for consumers; however, in the absence of any specific competition concerns about the proposed agreements, stakeholders’ proposals are better considered as part of other policy and regulatory processes. While the ACCC expects that the Optus/TPG agreements will not materially lessen competition, they do represent a significant change in the structure of the mobile market, the effects of which the ACCC will be monitoring closely.
The ACCC blocked a similar deal between Telstra and TPG, arguing that it would harm investment and consumers
The ACCC’s announcement is noteworthy as it previously blocked the proposed regional infrastructure sharing agreement between Telstra – the largest operator in Australia – and TPG. Under the 10-year agreement, unveiled in February 2022, TPG would have been able to increase its 4G population coverage to almost 99% by gaining access to some of Telstra’s mobile network assets, while in exchange Telstra would have access to TPG’s spectrum within a defined geographical area. However, in December of that year, the ACCC prohibited the deal, believing it would raise barriers to entry and expansion, reduce investment incentives and harm consumers in rural parts of the country. Optus was a particularly vocal opponent of that agreement, claiming it would overturn 30 years of regulatory policy that has promoted competition and investment in the telecoms sector, and lead to a “remonopolisation” of regional Australia. Despite a joint legal challenge from Telstra and TPG, the Australian Competition Tribunal (ACT) subsequently decided to uphold the ruling of the ACCC, arguably leading TPG to pursue an alternative arrangement with Optus.
