In an appeal of the the Australian Competition and Consumer Commission’s decision on Tuesday before Australian Competition Tribunal president Michael O’Bryan and members Dr Jill Walker and Diana Eilert, Optus, appearing as a contradictor, argued the proposed deal is anti-competitive and should not be approved.

The deal includes an agreement for Telstra to use TPG’s spectrum, for the pair to consolidate their mobile towers and grant TPG access to some of Telstra’s coverage, and for TPG to decommission or transfer its mobile sites in regional areas to Telstra.

Optus counsel Cameron Moore SC said that if Telstra could share TPG’s spectrum, his client would be unable match Telstra’s advantages in speed, coverage and costs.

“That aspect of the transaction is very troubling and swamps a number of other considerations,” said Moore. 

“That’s why I suggest that sometimes, things put forward as public benefits are actually aspects of the asymmetries in the competitive landscape that give rise to competition problems.”

Moore argued that under the proposed agreement, Telstra and TPG would be “parasitic” on each others’ networks, removing incentives for Telstra to invest in regional mobile infrastructure. 

“Mobile has had robust competition which has put Australia at the forefront,” Moore said. 

“If this transaction erodes the conditions of competition that is a long term change that cannot be reversed.”

Moore challenged Telstra’s assertion that the deal would yield public benefits, such as increased speed and coverage for regional customers.

“Anything that Telstra puts forward as a benefit is in fact a detriment,” said Moore.

Deal will increase competition, Telstra tells Tribunal

Dr Ruth Higgins SC for Telstra argued the transaction will not significantly reduce competition, but instead could increase competition in the national retail and wholesale markets as TPG becomes more competitive. 

“The proposed conduct and proposed transaction will not substantially lessen competition in any relevant market,” Higgins said. 

“The increase in competition in national retail and wholesale markets with respect to TPG’s increased competitiveness is a very substantial public benefit.

“It is immediate, it is certain, it is substantial and it must be weighted accordingly.”

Higgins said that the proposed agreement would move TPG closer in coverage to Telstra and Optus, but said a “substantial difference” will still remain because they will not share products. 

A TPG customer will still use TPG products in regional and metropolitan areas under the agreement, she said.

She also argued the transaction will improve services for customers because it will reduce congestion and increase coverage for Telstra, which could benefit rural emergency services and allow regional consumers to better work remotely. 

Higgins argued the current spectrum will be “under-utilised” without the proposed deal and it will result in increased costs due to duplication.

TPG will have new incentive to invest in regional infrastructure, Tribunal told

Robert Yezerski for TPG said it was “critically important” for the tribunal to consider that TPG did not have a large customer base in much of regional Australia because it did not have much coverage, while Optus had many customers in rural areas. 

Yezerski argued that after the arrangement with Telstra ends, TPG will have an increased customer base in regional areas and a reason to invest in rural mobile infrastructure. 

He said the arrangement will not have any long-term effects on competition because technological changes meant mobile towers may not be used for services in regional areas in the future.

Yezerski argued technological change “ought not be underestimated” and that it was uncertain whether mobile network towers will be essential to services after the agreement had expired, with the emergence of low orbit satellite systems a likely option for regional areas in the future. 

“The future is unknowable [but] it is a more competitive future, whatever happens,” Yezerski said. 

ACCC rejects Telstra, TPG network sharing deal

The hearing comes after the ACCC decided in December to reject the proposed arrangement between Telstra and TPG, finding it would entrench Telstra’s dominant position in the market. 

Under the agreement, which required approval from the ACCC, TPG would have authorised Telstra to use its spectrum, while Telstra would have shared access to its 3,700 mobile towers with TPG in select regional and urban fringe areas comprising 17 per cent of the Australian population. TPG planned to offer 4G and 5G retail and wholesale services in the region.

TPG would have transferred up to 169 of its existing mobile sites in the regional coverage zone to Telstra, with the remaining 725 to be decommissioned. The agreement would have lasted for 10 years, with TPG given the option of extending it for a further five years.

Telstra is represented by Ruth Higgins SC and Philip Strickland SC, instructed by Gilbert + Tobin. TPG is represented by Garry Rich SC, Robert Yezerski and Shipra Chordia, instructed by Corrs Chambers Westgarth. The ACCC is represented by Declan Roche. Optus is represented by Cameron Moore SC and Brendan Lim, instructed by Herbert Smith Freehills. 

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