New Zealand sensibly abandons latest 5G auction and just hands the spectrum over

A chunk of mid-band spectrum was due to be auctioned-off in New Zealand around now, but COVID-19 has caused a change of plan.

The Radio Spectrum Management department of the NZ government recently made the following announcement: “In May 2020, the Auction for short-term, early access rights in the 3.5 GHz band for 5G services (Auction 20) was cancelled. This was due to the constraints imposed by the Covid-19 pandemic. Instead, a direct allocation process will be undertaken. Offers will be made of 40 MHz to Dense Air, 60 MHz to Spark, and 60 MHz to 2degrees.”

Spark and 2degrees are two of the three Kiwi MNOs, alongside Vodafone NZ, which apparently has quite enough mid band spectrum already, thank you very much. Dense Air is a UK-based company that specialises in small cell connectivity. Understandably Spark and 2degrees are happy with the decision.

“Securing 3.5GHz spectrum was critical for the rollout of a full suite of 5G services, so we would like to acknowledge the Government for facilitating the allocation, which will enable us to proceed with our planned 5G roll out at pace,” said Spark CEO Jolie Hodson. “We plan to switch on 5G sites in a number of major centres and regions across the North and South islands over the next year. To maintain this momentum, we are keen to work with Government to accelerate the timeline for the longer-term spectrum auction, which is currently scheduled for November 2022.”

“This decision makes sense. At a time when the impact of Covid-19 means operators are having to make tough calls on how they spend their capital, it needs to be focused on the networks delivering the capacity people need – and can use – today,” said 2degrees Chief Executive Mark Aue. “At the same time, access to 5G spectrum will allow 2degrees to continue its 5G network planning and site acquisition so it can build and test the technology. This will provide time for 5G uses cases to develop, and initial deployments, in advance of long term spectrum rights that will power national 5G services from late 2022.”

Vodafone seems to have kept quiet on the matter, but it must be secretly annoyed at the good fortune of its rivals. Maybe it will have a quiet word with the government behind the scenes, asking for a cheeky bit of spectrum sometime in future, to level the playing field once more.

It’s good to see that governments and regulators are capable of forgoing easy money when the circumstances demand radical action. Besides, public money is already being thrown around in a bid to stave off another great depression, so a few Kiwi buck is just a drop in the ocean. But credit where it’s due, this is not the time for the public sector to be extorting money from the private sector and NZ deserves credit for acknowledging that and acting accordingly.

Toothless German regulator capitulates during 4G coverage review

German telco regulator, Bundesnetzagentur has let all three mobile network operators escape any punishment for missing coverage obligation deadlines.

While many regulatory authorities might choose to punish telcos for missing coverage obligations, Germany’s Bundesnetzagentur is perhaps offering some colour as to why the country lags behind others in terms of connectivity benchmarking. All three failed to meet commitments made to the regulator in 2015 but have been afforded the opportunity to correct mistakes by the end of 2020.

A regulatory enforcer who does not dish out punishments when telcos fail to meet obligations is as useful as a chocolate teapot in a Saharan Quidditch match.

“Our primary goal remains to ensure that the coverage of mobile broadband is moving forward,” said Jochen Homann, President of Bundesnetzagentur. “We want to see verifiable improvements over the next few months that will ensure that the requirements are fully met by the end of the year. This expressly includes that we may impose fines and fines if necessary.”

A fine might be directed towards the telcos in the future, but that is not the point. If you give these companies an inch, they will take a mile. If this deadline was not actually a deadline, what was it?

This relaxed attitude towards enforcement of obligations perhaps explains why Germany is seen as a laggard in the connectivity stakes.

Looking at OpenSignal’s 4G coverage data, Germany is one of the poorest performing European nations with geographical coverage of 76.9%. These estimates are slightly dated, but the rankings would not have changed that dramatically. But it would be unfair to reserve all the criticism for the MNOs when the broadband service providers are similarly sloppy.

According to the latest estimates from the FTTH Council Europe, Germany has only connected 3.4% of homes to full-fibre broadband, which is only set to increase to 24.8% by 2025. To demonstrate the performance of Germany to date, the UK currently has a higher percentage of full-fibre homes. Being behind the UK today is a pretty embarrassing place to be.

Coverage maps and data does not give the complete picture for a measure on how developed a country’s digital society and economy is, but it is a useful yardstick. As a more traditional country, it would surprise few Germany has been slow to evolve, however when you add into the mix a regulator which does not run a tight ship, it starts to become more obvious as to why.

These telcos are pursuing profits, therefore the urban environments will be favoured in the ROI chase. The regulators have to force telcos to provide connectivity in the most sparsely populated areas, as few telcos care about farmer John or dog walker Jane. This is where Bundesnetzagentur is failing as a regulator; it is not holding the telcos accountable, instead it added some extra slack to the leash.

In the review, Telefónica failed to meet requirements in all 13 federal states and only got to 80% coverage on major transport links. Deutsche Telekom missed the requirements in three states and failed to meet the obligations for main traffic routes with 97% coverage for motorways and 96% for the railways. Vodafone fell short of expectations in four states, while coverage of 96% for motorways and 95% for railways are below the coverage requirement.

The obligations which were agreed were 98% 4G coverage of households nationwide and 97% of households in each federal state with minimum download speeds of 50 Mbps. In addition, all major transport routes would have to be fully covered.

Although some might suggest these obligations were too high, the telcos did have five years to meet the expectations, and they agreed to them in the first place.

Telcos and regulators have to have a working relationship. Collaboration is a buzzword, but it is perfectly suitable and should be appreciated by all markets. However, there also needs to be a bit of fear to ensure the dynamic works effectively. The regulator is a watchdog, not an industry partner, and the prospect of swift and measured punishment needs to be a realistic possibility.

A self-regulating industry almost always fails in some way or another, and that is effectively what situation is created when you have a toothless regulator.

Ireland unlocks additional spectrum to combat COVID-19

Irish authorities have signed new regulations allowing the release of additional radio spectrum to create extra capacity for mobile phone and broadband services.

Signed by Minister for Communications, Climate Action and Environment Richard Bruton and ComReg, the Irish telco regulator, the temporary measures are in response to a sharp increase in the use of mobile networks. The telco networks are currently standing up to the additional demand, though extra help will always be welcomed.

“Now, more than ever we are depending on technology to connect with others and to access services,” said Minister Bruton. “These regulations will ensure that our mobile network operators have the capacity to accommodate the increase in demand. I’d like to thank ComReg for responding to this need so quickly.”

The additional spectrum was released following a consultation with Eir, Three, Vodafone and Virgin Media, along with RTÉ and the Irish Aviation Authority, which was published on March 27. In contrast to the usual state of play in the telco industry, this is an example of rapid action in response to a very difficult environment.

“The provision of this spectrum will help the mobile providers cater for increased demand on their networks,” said ComReg Commissioner Jeremy Godfrey.

“ComReg will continue to work with industry and will support operators so that telecoms networks may continue to meet demand during these unprecedented times. I wish to pay particular tribute to the dedication and skill of ComReg’s staff in completing such a complicated project with such great professionalism and in such a short time.”

The additional airwaves will be released in the 700 MHz and 2.6 GHz spectrum bands, with changed conditions for 2.1 GHz to ensure it can be used for 4G connectivity. Telcos will be able to apply for temporary licences that run for a maximum of three months, for a fee of €100, with the options to extend the licences should it be required in the future.

Ireland is not the first country to release additional spectrum, the FCC offered assistance to AT&T, T-Mobile, US Cellular and Verizon in the US, though many European telcos have said they do not necessarily require the additional airwaves to maintain networks today.

Ofcom, the UK regulator has said it does not plan to release additional spectrum and it has not had any appeals to do so either. Mobile UK, the telco association in the UK, also confirmed operators are not seeking additional spectrum. In Italy, Telecom Italia also said it has made no requests, while Orange also confirmed it has adequate spectrum for today’s operations so would not be making any requests.

Although this seemingly not developing into a pan-European trend, it is somewhat comforting to see a regulator responding promptly. It is very out of character for the telecommunications industry.

White House sets up committee to assess foreign participation in US telco

President Donald Trump issued an executive order to establish a new committee to provide recommendations to FCC  regarding foreign applications for telecom licences in the US.

The formally titled “Executive Order on Establishing the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector” was issued by the president on Saturday, with a primary objective to ‘assist the FCC in its public interest review of national security and law enforcement concerns that may be raised by foreign participation in the United States telecommunications services sector’.

The committee will be chaired by the Attorney General (William Barr as the current job holder) and members will include the Secretary of Defense, the Secretary of Homeland Security, and heads of other executive departments or agencies, and Assistants to the President which the President sees appropriate. Advisors to the committee will include a dozen secretaries and heads of relevant departments and agencies, for example the State Department, Treasury, Commerce, National Intelligence, Office of Science and Technology Policy, as well as the President’s assistants for National Security Affairs and Economic Policy.

The committee’s working relation with the FCC will go two-ways. The FCC can refer applications for licences or transfers of licences to the committee for review. The committee will ‘review applications and licenses for risks to national security and law enforcement interests posed by such applications or licenses’, and will be authorised to collect information on applicants needed for the reviews. Based on such risk reviews, the committee shall recommend to the FCC whether it should dismiss or deny applications, set condition on or modify the granting of licences, or even revoke licenses already granted.

“I applaud the President for formalizing Team Telecom review and establishing a process that will allow the Executive Branch to provide its expert input to the FCC in a timely manner,” said FCC Commissioner Ajit Pai. “Now that this Executive Order has been issued, the FCC will move forward to conclude our own pending rulemaking on reform of the foreign ownership review process.”

Citing the FCC’s decision to reject an application from China Mobile to offer international telephony service last year, Pai said “this FCC will not hesitate to act to protect our networks from foreign threats. At the same time, we welcome beneficial investment in our networks and believe that this Executive Order will allow us to process such applications more quickly.”

Some of America’s biggest telecom companies are of foreign ownership. The newly formed New T-Mobile, the merger between T-Mobile and Sprint, is a subsidiary of Deutsche Telekom, with the German parent company being the biggest share-holder (43% of total share), and its second largest shareholder is Japan-based Softbank (23%). Vodafone used to own 45% of Verizon Wireless until 2014. But these naturally fall under the “beneficial investment” category. It will be applications like the one filed by China Mobile that will get most of the committee’s attention.

TIM gets fined for rigging Italian fibre market, will appeal

The Italian Antitrust Authority (AGCM) reckons operator TIM acted to restrict competition in certain parts of the domestic fibre market. TIM disagrees.

We’re relying on Google Translate here, as the decision hasn’t been published in English yet, but the decision refers to ‘white areas’, which are parts of the country that offer relatively poor returns on fibre investment. TIM had initially decided it couldn’t be bothered with them, it seems, but then changed its mind when competitors stepped in with a bit of help from the tax payer.

“The Authority has ascertained that TIM has hindered the holding of tenders, launched under the Government’s ultra-broadband national strategy, for the support of investments in ultra-broadband network infrastructures in the most disadvantaged areas of the national territory ( so-called white areas),” said the translated AGCM announcement.

“In particular, TIM decided to make an unprofitable modification of the coverage plans of these areas during the tenders and at the same time undertook legal initiatives instrumentally aimed at delaying the same.” Accordingly TIM is being fined €116 million.

TIM doesn’t see what the problem is since it has already sorted all this stuff out with the Italian telecoms regulator AGCOM, and accordingly will appeal. “AGCM’s decision also raises concerns, not least because the Italian telecoms watchdog AGCOM has taken an entirely different view of TIM’s alleged anti-competitive behaviour,” said the TIM response. “In fact, AGCOM has on several occasions dealt with the issues discussed in the preliminary investigation, adopting specific regulations on most of the cases covered by the provision.

“The main objection of the decision refers to an investment project in market failure areas (so-called White Areas), considered by AGCM to be abusive towards Open Fiber which should build a fibre infrastructure to the homes with public resources (as recalled by the AGCM), which though did not take place as also highlighted by several institutional offices.”

It all seems fairly technical and the size of the fine by itself is not that significant. Having said that, if TIM doesn’t think it has done anything wrong and the regulator agrees then still got to hurt. The most intriguing part of this is that it seems to pitch the regulator in direct opposition to the antitrust authority and it will be interesting to see which prevails.

Facebook faces €5mn fine in Italy

The Italian competition authority, Autorita’ Garante della Concorrenza e del Mercato (AGCM) is intending to fine Facebook €5 million for ignoring its previous ruling.

Having already been fined €10 million in December 2018 for violating the country’s consumer code, the AGCM has followed up with another seven figure-fine for ‘non-compliance’. Facebook has seeming not made amends for the violations of yesteryear, by adequately informing the user of data collection, and will face another investigation.

The new investigation, which has been confirmed by the Regional Administrative Court of Lazio, will potentially fine Facebook an additional €5 million.

The issue which is at the crux of this saga for Facebook is ultimately one of transparency. While Facebook does not charge users for its services, the Italian competition regulator does not feel the social media giant is doing enough to make its users aware of how personal data is collected, store and analysed for commercial means.

Although Facebook removed the ‘it’s free and always will be’ tag from the website under orders from the regulator, it is now believed the social media giant failed to ‘adequately and immediately’ inform users on the data collection ambitions. Facebook also failed to publish the amending statement on the platform.

In addition to a €5 million fine, Facebook will have to publish an amending statement on the homepage of its website, the app and the personal page of each registered Italian user, should the proceedings find Facebook guilty.

While it will surprise few Facebook is finding itself in another spot of bother when it comes to transparency and honesty with its users, it is quite surprising the social media simply ignored the demands of the regulator. Although it is far from a good corporate citizen, it seems highly unusual the team simply didn’t pay attention to the Italian regulator in the first place.

Could Iliad Italia be a victim of Corporate Darwinism?

Iliad’s Italian business unit has lodged complaints with Italian and European regulators regarding network sharing deals, but could these objections be effectively ignored?

While network sharing is a proposition which offers great benefits to cash-strapped telcos in pursuit of the eye-wateringly expensive 5G connectivity dream, it is not without its opponents and critics. Some regulators have become very defensive about the progressive idea, while there are telcos being left out of discussions who are objecting also.

In Belgium, Telenet has raised concerns over a tie-up between Orange and Proximus, while the European Commission prevented O2 and T-Mobile from expanding an existing agreement to include 5G in the Czech Republic. Both of these network sharing partnerships have been halted in the pursuit of maintaining attractive levels of competition, but Iliad’s objections might fall on deaf ears.

Iliad is objecting to network sharing agreements between Wind Tre and Fastweb, as well as another between Telecom Italia and Vodafone Italia. Iliad is the only major telco in Italy not to be in a network sharing discussion. If these partnerships bear fruit, efficiencies will be realised, meaning competitor funds can be redirected elsewhere.

If this is a prediction of the future, Iliad will be in a weakened position to compete in the Italian market, and financial pressures could become too much to justify the venture. Iliad could become a victim of Corporate Darwinism.

The competition versus consolidation conundrum

Competition has been somewhat of a difficult topic of conversation between the regulators and telcos in recent years, primarily because of the polar-opposite opinions on market consolidation. The telcos would like to consolidate to achieve scaled economics, while the regulators want to preserve the number of telcos in each of the markets to maintain competition and encourage investment.

There are pros and cons on either side of the fence, though the regulators do not seem to be shifting. This argument has knock-on effects for network sharing agreements.

Ovum’s Dario Talmesio points out, network sharing could be viewed as consolidation through the backdoor. Combined assets reduces the number of independent networks in the market, and potentially reduces investments and competition.

In the Czech O2 and T-Mobile case, the European Commission suggested as there were only three major players in the market, further combination of assets between two of the parties would present too much of a risk of the third being squeezed out. The same case has been presented by Telenet to the national regulator in Belgium.

Regulators are sensitive to any propositions which would negatively impact competition in a market, but what about markets where the number of telcos could actually be reduced?

How much is too much competition?

While there is no official stance on the number of telcos in a market, the European Commission does not generally approve activities which would reduce the number of telcos below four. Vetoing the O2/Three merger in the UK, or Telia/Telenor in Denmark are two examples, but this might not be the case in Italy.

If regulators were to allow the network sharing agreements to proceed, Iliad would certainly be in a very precarious position, though there would still be four mobile service providers in the country; Telecom Italia, Vodafone Italia, Wind Tre and a Fastweb proposition enabled by its agreement with Wind Tre. This might be deemed enough competition in Italy to maintain a healthy market for the consumer and a financially sustainable one for the telcos.

The four telcos named above are venturing into untested waters here. This presents a new question for the regulators to answer on competition. Theoretically, suitable levels of competition are being sustained, and this network sharing dynamic has been approved by regulators in the past.

In the UK, Three and EE have formed MBNL, while Vodafone and O2 have CTIL. These are passive infrastructure sharing joint ventures, focusing on the rural environments. It is a similar situation which would be created in Italy, and the UK does have a sustainable telco industry. It is evidence that the dynamic could work, with or without Iliad in the mix.

Could this be a case of Corporate Darwinism?

Corporate Darwinism occurs when a market evolves to such a degree that players are either irrelevant or uncompetitive, and therefore go out of business.

The best example of this is Blockbusters. Once a dominant player in the movie rental business, as the distribution of content moved online the proposition of Blockbusters was no-longer relevant, therefore the company did not survive. This is an example of a market evolving to such a degree that the business was no-longer relevant.

The Iliad example is perhaps one where the market evolves to such a degree that the business is no-longer competitive.

If the four remaining mobile service providers have network sharing initiatives driving network deployment, investments can be more intelligently spend (a) on the network, or (b) in other areas of the business.

The shared networks might have a greater geographical footprint, have future-proofed technology and higher performance specs. Theoretically, Iliad would churn subscribers to higher quality rivals. Also, as less money is being spent on network deployment, tariffs could be lower, but profitability could be maintained. Or, more cash could be invested in value-add propositions for products. Rival offerings could look more attractive than Iliad products.

If regulators approve the network sharing agreements between Telecom Italia and Vodafone Italia, alongside Wind Tre and Fastweb, Iliad would find itself in a very difficult position. It become difficult to see the telco surviving in the long-term.

Unfortunately for Iliad, there is a coherent argument to approve the partnerships to drive towards a more sustainable telecoms industry, allowing the telcos to realise efficiencies ahead of the vast expenditure of 5G. The consumer would benefit, as would enterprise customers and the Italian economy on the whole. It might be a case of letting Iliad die out for the greater good of the Italian telecoms sector.

It’s déjà vu all over again as Vivendi suffers another Italian defeat

Italian Media company Mediaset wants to merge its Italian and Spanish businesses, something that significant shareholder Vivendi opposes.

The combined company would be called MediaFor Europe and a Mediaset EGM recently voted to go ahead with the merger plan. French conglomerate Vivendi owns around 30% of Mediaset, but two thirds of its stake is held in a trust by a company called Simon Fiduciaria, following a ruling by the Italian telecoms regulator that owning big chunks of both Mediaset and operator group TIM violates media plurality laws.

Subsequently it seems to have been decided that Simon Fiduciaria doesn’t get a vote in Mediaset general meetings, thus greatly diminishing Vivendi’s voice at such events. Vivendi reckons that’s the only reason the Berlusconi family, which owns almost half of Mediaset via its investment vehicle Finnivest, won the recent vote and it’s not happy about it.

Vivendi deplores today’s irregular approval by the Mediaset Extraordinary Shareholders Meeting of the new merger plan regarding MediaForEurope,” said a Vivendi press release. “The new plan has only gained approval because of the unlawful refusal to allow Simon Fiduciaria (which holds 19.9% of Mediaset share capital) to vote, relying on an interpretation of the Italian media law which is contrary to the EU Treaty.

“In addition, the new plan was adopted ignoring Italian law procedures regarding trans-border mergers, including the withdrawal rights for shareholders, and has merely removed some blatantly abusive clauses, without modifying the disproportionate rights granted to Fininvest.

“All recent judicial decisions and opinions, in particular from the Advocate General of the Court of Justice of the European Union in December, have not discouraged Fininvest’s representatives in the Mediaset Board from depriving minority shareholders of their most basic rights. The Mediaset Board has once again placed the company in a situation of serious legal uncertainty.”

All this huffing and puffing from a massive conglomerate that routinely tries to hijack the running of large companies without going to the trouble of buying them is a bit rich. Last year Vivendi’s protracted attempt to do so at TIM failed and history seems to be repeating itself, with Mediaset regarding Vivendi’s interests in the company as hostile. Vivendi’s principle objection to this merger seems to be a dilution of its shareholding in the combined entity, rather than anything to do with the strategy and health of the company as a whole.

Canadian complaints give regulator more ammunition for new telco

The Commission for Complaints for Telecom-television Services (CCTS) has said complaints against the telcos are at an all-time high, just as competition authorities are building evidence.

Usually annual complaints reports do not grab headlines, but this report needs to be placed into context. Earlier this week, the Canadian Competition Bureau has suggested new regulations should be introduced to encourage new entrants in the telco space, breaking the over-arching dominance of the ‘Big Three’; Bell, Telus and Rogers.

Looking at the CCTS report, for the last 12 months the Commission received nearly 19,300 complaints from telecoms customers, an all-time high for the organisation’s history.

The report suggests there is also a 42% increase in the number of service provider violations of the Wireless Code, most notably failure to provide important documentation to customers and to provide proper notice before disconnection of service. Complaints against Rogers increased 26.5% year-on-year, Telus’ jumped 70.6%, while Bell’s increased 24.2%.

Complaint Percentage of total
Billing issue 43.1%
Contract dispute 32%
Service delivery 21.8%
Credit management 3.1%

Looking at the long-term trends, complaints about wireless services have increased 90.6% over the last five years. The number of complaints about wireless on the whole increased year-on-year 53% for 2018/19, and accounts for 41% of all complaints directed towards telecoms and TV service providers.

Telco Number of complaints Percentage of total
Bell Canada 5,879 30.5%
Rogers 1,833 9.5%
Telus 1,610 8.3%
Virgin Mobile 1,253 6.5%
Freedom Mobile 1,253 5.9%

Telcos are traditionally very poor when it comes to customer service and delivering on the promised experience, so the poor performance described in the report will come as little surprise. However, those who are pursuing the introduction of new regulations to encourage additional competition will find the results very helpful.

As mentioned previously, the Canadian Competition Bureau has submitted a report to the Canadian Radio-television and Telecommunications Commission (CRTC) questioning whether the industry is in a healthy position. The report requests additional regulation which would encourage the creation of more MVNOs, as well as follow-ups which would assist these MVNOs in deploying their own, independent, scaled-networks. Ultimately, the Competition Bureau wants more competition across the country.

In general, competition authorities only pursue additional competition in markets when the status quo is deemed unsatisfactory. Introducing new dynamics are a means to ensure the consumer gets a fair price and a satisfactory service.

In the report submitted to the CTRC, the Competition Bureau suggests prices are 35-40% lower in regions where there is additional competition to drive the ‘Big Three’, and this competition only have to grab 5-10% of market share. Add the increased number of complaints into the equation, and the case for a competition shake-up in the Canadian market becomes stronger.

Canadian MNO/MVNO ARPU ($)
Bell Canada 51.05
Rogers 41.57
Telus 49.69
Freedom Mobile 28.47
Videotron 29.66

These are still the early days, but we suspect after a public consultation, efforts might be made to introduce additional competition into the market. This could mean forcing the existing telcos to lower wholesale costs to encourage the creation of new MVNOs in the short-term, it could also mean financial/regulatory assistance for these MVNOs to free-up capital for the deployment of infrastructure.

Another worrying development for the Canadian telcos is the up-coming 3.5 GHz spectrum auction which will take place next year. This is valuable spectrum for future 5G services, and should authorities want to introduce new competition, said competition would want a slice of the 5G airwaves. Perhaps limits will be introduced to the amount of spectrum the ‘Big Three’ can buy, and maybe it will be offered at discounted rates for new-players who commit to aggressive network deployment plans.

Country Price per GB ($) ARPU ($)
Canada 12.02 37.95
United Kingdom 6.66 17.65
United States 12.37 32.38
France 2.99 12.37
Japan 8.34 29.52
Australia 2.47 23.29

These are all guesses for the moment, though we strongly suspect Canada might be heading towards a situation where it wants to create additional competition. Prices are high in Canada in comparison to the rest of the world, $12.02 per GB a month and ARPU of $37.95, which is always a negative sign. Admittedly, the Canadian landscape makes it difficult to deploy networks cost-effectively, but the regulator wants to ensure the consumer’s wallet does not take too much of a beating.

It is unlikely to happen in the short-term, but the signs are not looking good for the status quo. The evidence is starting to point towards the need to introduce more competition in the Canadian telecoms market.

Vodafone Australia and TPG told to wait three months for merger decision

The final arguments have been presented to the Australian courts and now Vodafone Australia and TPG will have to wait until early 2020 for the decision on whether the $15 billion merger will be allowed.

This is a saga which has the potential to cause some long-term friction between the regulator and industry. Wherever you are around the world, best-case scenario would be collaboration between all elements of the ecosystem, but it does appear this is far from the case.

In a court case which has been on-going for just over three weeks, Justice John Middleton will now take into consideration all the arguments which have been presented. Unfortunately for those who are seeking a swift conclusion to the litigious chapter will be disappointed. Justice Middleton has said to expect a decision in January 2020, or potentially February.

Australian Competition and Consumer Commission (ACCC) took the decision to block the merger between Vodafone Australia and TPG on the grounds it would negatively impact competition in the future. The telcos are arguing this decision should be over-turned, suggesting it is the only way to ensure competition in a world which is quickly being defined by convergent operations.

This is a decision which will certainly disappoint someone. As patiently as Justice Middleton could look, there is no middle-ground between the feuding parties. The regulator is effectively accusing TPG of lying and the Vodafone/TPG representatives are suggesting the watchdog is not living in the realms of reality.

Looking at the perspective of the ACCC, the regulator believes the merger would prevent a fourth mobile player from emerging in the country. This is of course presuming TPG still has the appetite to deploy a network, and considering the telco has said it does not, the regulator is making a bold assertion.

Another interesting statement made by Michael Hodge QC, the lawyer representing the watchdog, is that its persistence to block the merger is based on “regulatory paternalism”. This is effectively a more acceptable way of saying ‘we know what better for you than you do’.

On the other side of the aisle, Vodafone and TPG are questioning whether the ACCC is looking at the same conundrum.

TPG did have an interest in diversifying revenues to enter into the mobile space, it was potentially going to do a ‘Jio Job’ to cause chaos, but the Huawei ban effectively put an end to this. Huawei was being touted as TPG’s main supplier of network infrastructure equipment, though the Australian ban for the vendor made financially unviable to pursue the network deployment, according to the telcos.

“Indeed, on the Commission’s evidence, TPG dodged a bullet that the network that they were rolling out would have been one of the great white elephants of Australian telecommunications history,” said Peter Brereton QC, representing Vodafone Australia at the trial.

If you believe the telcos, TPG is no-longer interested in building its own mobile network. It is not a financially attractive. Should the ACCC’s blockage of the merger stand, Australia will continue with three mobile network owners, though Vodafone will be in a weakened position to compete with the likes of Telstra and Optus.

This is the question which Justice Middleton needs to ponder. What is the best course of action for enhanced competition in the future? Three strengthened, converged telcos, or a fingers-crossed situation that TPG will be able to source CAPEX to fuel its own network deployment.

There are of course good and bad arguments on both sides of the aisle. The ACCC is potentially right to push for a disruptive fourth mobile provider, though is it reading the environment correctly? The telcos are of course correct to pursue a more comprehensive converged player, three top-tier telcos is certainly favourable than a duopoly, but there might be some nuanced language over the TPG appetite for network deployment moving forward.

The risk which could emerge is potential animosity. The UK’s connectivity landscape suffered due to friction between BT and regulator Ofcom, and there is potential for the same outcome here. Vodafone Australia and TPG only have one thing on their mind right now; a tie-up to challenge Optus and Telstra. The ACCC has taken somewhat of a patronising and stubborn stance, and seemingly does not want to consider the opportunity for increased competition with three converged operations.

Neither party is willing to budge, and it seems the loser will have to swallow a lot of pride to ensure a smooth relationship in the future.