Telstra and TPG have unleashed a blizzard of expert reports in an attempt to refute Optus’ opposition to their proposed spectrum and network-sharing deal.
In particular, the two refute the characterisation of the multi-operator core network (MOCN) scheme as a “merger”, which went public in late June when the ACCC published comments Optus had submitted to the inquiry into the deal.
The ACCC, as part of its inquiry into the MOCN, has now published responses from Telstra and TPG, supported by reports from international competition expert Richard Feasey [pdf], network capacity modelling from Aetha [pdf], and economists Emma Ihaia [pdf] and Dr Jorge Padilla [pdf].
Alternatives discussed in the Telstra/TPG filing [pdf] are in a largely-redacted document called the “TPG Counterfactual” [pdf], which details actions TPG would have to take if the MOCN arrangements fall through.
One such action would be that TPG would have to negotiate a roaming arrangement to achieve coverage outside its own network footprint, and Optus is the only alternative to Telstra for that.
The potential for a roaming agreement only offers the possibility of an agreement covering 4G services, not 5G.
Without such an arrangement, TPG stated, “the counterfactual would involve it undertaking a targeted build of a small number of sites in the 17 percent regional coverage zone”.
TPG also notes that the success of any roaming negotiation is “speculative”.
The joint Telstra/TPG submission noted that it’s unlikely that Optus would offer TPG a similar arrangement to the one on the table with Telstra.
The submission even supports the surmise that TPG at least approached Optus at some point: “it is unlikely that TPG would be able to enter into an active network sharing arrangement with Optus for at least three to five years”, the submission stated.
The report also demonstrates a good understanding of Optus’ spectrum holdings: “Optus does not need and cannot readily pool TPG’s existing spectrum holdings in the 17 percent regional coverage zone”.
The TPG/Telstra submission also stated that in the regional coverage zone, the MOCN “is far superior than any other option available to TPG to expand its regional coverage”.
An inability to pool spectrum would also “reduce TPG’s negotiating leverage”, and would cost TPG more, since it would not to be able to offset MOCN service fees with spectrum payment.
That leads to the conclusion in the Feasey report that a deal with Telstra gives TPG a more competitive platform against Telstra and Optus than a similar deal with Optus would.
As well as attacking the “merger” characterisation, Telstra and TPG also want to refute four other assertions Optus has made in its objections to the deal: that it reduces competition and will lead to TPG raising its prices; that it will make Telstra “unassailable”; that Optus will have less incentive to invest in its own network; and that network sharing with Optus is a valid counterfactual.
The ACCC is expected to make its determination in November or December.