James FernyhoughReporterOct 10, 2019
Labor communications spokeswoman Michelle Rowland has questioned the competition watchdog’s decision to block the merger between TPG and Vodafone Hutchison Australia, saying the mobile market is already highly competitive.
In a speech at the CommsDay conference in Melbourne on Thursday, Ms Rowland will say the more-the-merrier view of competition is “an overly simplistic view of what is a more complex world”.
“It is not always the number of competitors, but the right type of competition that is critical,” the former communications lawyer will say.
Her comments come a little over a week after the end of the Vodafone-TPG Federal Court hearings into the Australian Competition and Consumer Commission’s decision to block the $15 billion merger. A decision is expected in February.
The ACCC’s view is that the merger will prevent TPG from building the nation’s fourth mobile network offering ultra cheap plans, and will therefore result in a substantial lessening of competition. But Ms Rowland said price competition was already healthy in the mobile sector.
“[N]o-one comes up to me raising concerns about mobile prices. And to be fair, why would they?” she will say. “The Australian mobile market is delivering good value and choice for consumers. Our mobile networks are ranked fourth in the world, and mobile prices, in real terms, have declined over the past decade.”
The more important issue, she will say, is the quality of those mobile networks, which would increasingly have to support customers with high data requirements who were using their mobiles as an alternative to fixed-line internet.
“If the industry doesn’t have optimal scale, infrastructure synergies, or balance sheets capable of delivering ongoing investment, these networks may not be able to remain cost-competitive if they want to maintain a standard of quality,” she will say.
She will also argue that scale will allow more investment in 5G technology, enabling advances in automation and the Internet of Things.
“This has to be a priority given how critical machine-to-machine connectivity will be for national productivity in areas such as autonomous transport, agriculture and manufacturing. It is arguably the next frontier of economic growth,” she will say.
“If the industry doesn’t have optimal scale, infrastructure synergies, or balance sheets capable of delivering ongoing investment, these networks may not be able to remain cost-competitive if they want to maintain a standard of quality.
“Personally, I’m not particularly absorbed by the question of whether or not a company can or will build Australia’s fourth mobile network. The question I’m more concerned with is: would it help?” she will say.
Both TPG and Vodafone insist a merged company would have readier access to capital, allowing them to invest more and compete more effectively with Telstra and Optus. The ACCC has focused on the competitive benefits of a low-cost fourth network.