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 said The new daily that if the agreement were approved, the two telecom operators would have too large a share of the regional mobile internet market and could therefore set prices without fear of losing customers to competitors.

The proposed combination would allow Telstra and TPG to use each other’s mobile network infrastructure in regional areas to provide more extensive 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 agreement could allow Telstra to circumvent the limits of competition and increase its market share within the regional coverage area.

The RCZ encompasses regional and urban outlying areas and accounts for approximately 17% of Australia’s population coverage.

Retail is growing

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

On the face of it, he said infrastructure sharing between mobile internet retailers is a good thing – but not if the deal is exclusive between certain companies, as the Telstra and TPG deal would be.

Budde said there needs to be a neutral infrastructure that can be used by all telecom operators, in the same way that NBN can be used by all Internet retailers.

Widespread access to NBN has allowed smaller online retailers to gain market share and exert downward pressure on prices.

A recent ACCC report found that the three major telcos Telstra, TPG and Optus lost market share in the NBN 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 this network, build and offer their services online,” Budde said.

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

Mr Budde said regional Australians would be most affected by the proposed Telstra-TPG combination, as those markets benefit from less competition than urban markets and, therefore, less downward pressure on prices.

Telstra already owns a 48% share of the national market for postpaid mobile plans, and TPG/Vodafone holds 18%.

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

What the Telstra/TPG merger means for consumers

Former Internet Australia chief executive Laurie Patton said big telecoms like Telstra already have a ‘grip’ on the provision of NBN services and the last thing consumers need is less of choice for their mobile Internet.

He said there would be no room for price competition among mobile internet retailers if the existing “telecom gorillas” continued to dominate the market.

The absence of competition would mean that large telecom operators can set higher prices without fear of losing customers.

Mr Patton said it was “Economics 101”.

“If market concentration at the telecom operator level increases, competition will decrease and consumers will be the most disadvantaged,” he said.

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

And regional customers will “absolutely” be the most disadvantaged, he said.

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

Mr Patton said NBN Co should have the first option of acquiring unallocated 5G infrastructure to replace its underperforming fixed wireless network, especially in underserved 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.