Telstra defends network, warns against roaming changes

11/10/2016 - 13:06

Telstra has defended the quality of its network after a series of major disruptions this year while also warning against the possible regulation of mobile roaming charges.

Telstra has defended the quality of its network after a series of major disruptions this year while also warning against the possible regulation of mobile roaming charges.

“There is nothing, I repeat nothing, inherently wrong with Telstra’s core network,” new chairman John Mullen told shareholders today.

Mr Mullen said an assessment of Telstra’s networks by independent experts found it has world class infrastructure.

Chief executive Andrew Penn said Telstra’s network includes 230,000km of optical fibre cabling, 170,000 routers and switches, and 8,500 mobile network sites and 5,000 exchanges.

“With this level of complexity, occasionally issue do occur,” Mr Penn said.

“However these interruptions had a wider impact than is acceptable and we have apologised for that.”

Mr Penn said Telstra had allocated $250 million from its capital budget to address network reliability.

The telco also used its annual meeting to warn that ‘declaring’ mobile roaming charges would hurt profits and network investment in regional areas.

“Telstra has carefully invested billions of dollars over many years building the best networks and we do not think it is right that others be given a free ride on our networks,” Mr Mullen said.

Telstra currently sells access to parts of its network at negotiated prices, and two previous inquiries by the Australian Competition and Consumer Commission have found that access didn't need to be regulated.

However, the ACCC last month launched a third inquiry, with a ruling due in February.

"If the ACCC decides to declare mobile roaming, it would absolutely be at the expense of you, the Telstra shareholders," Mr Mullen said.

"It would also be very bad for Australians that live and work in regional areas.

"Why would anyone invest in maintaining or upgrading their regional networks when they can hitch a ride on someone else's network and there is no longer any competitive differentiation from greater network coverage?"

Mr Penn criticised Vodafone, which has argued for change.

"The principal advocate for mobile roaming is a foreign company that has chosen not to invest to the extent that Telstra has," Mr Penn said.

"A foreign company that is very capable of investing and a foreign company that has argued against roaming in other markets where it suits it do so."

Optus has agreed with Telstra that regulating roaming could pose a risk to investment in regional areas.

In a speech last month, Vodafone chief executive Iñaki Berroeta said Australia has a telecommunications competition divide.

“In the major cities, consumers can choose from three world-class 4G networks at competitive prices,” he said.

“But in regional Australia many consumers don’t have coverage, or have some coverage but don’t have a choice.”

Mr Berroeta said there have been a lot of emotional and misleading statements about regulation of domestic roaming.

“Telstra proudly proclaims that its network is over one million square kilometres larger than its nearest competitor,” he said.

“But again, this is the result of public subsidies and regulation, and it leaves millions of Australians without a choice in mobile.”

Mr Berroeta also insisted domestic roaming was not a “free ride”.

“It is a network sharing arrangement where operators pay a market price for their customers to use another operator’s network, either through a commercial agreement or regulated pricing.

“Either way, the roaming provider would earn a fair rate of return.

He also said threats of reduced investment in regional areas were not supported by evidence internationally.

“There is a long track record of data on what happens when you regulate domestic roaming – you only have to look to the US, Canada, France or New Zealand which regulated domestic roaming in the last decade.

The larger operators in those countries all raised similarly predictable threats that regulated roaming would undermine investment, but most saw significantly increased investment following regulated domestic roaming.”

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