Govt calls snap review of mobile blackspots program after fifth round tanks

The government will rejig its mobile blackspots program after it was left holding 58 percent of the cash allocated for round five, and amid industry threats to skip future rounds. 

Communications Minister Paul Fletcher unveiled a review of the scheme and a live test of the outcomes through a new funding round 5A.

The new round uses $46 million in funds the government was unable to find a home for in round five.

It wound up spending just 42 percent of the allocated money as the attractiveness of the program’s current structure faded.

“The government has allocated funding for all Round 5 proposals that offer value for money to taxpayers and meet the guidelines for the round,” Fletcher said in a statement.

“Of the $80 million made available, $34 million has been successfully allocated.

“The existing program design has served Australia very well.  However, with each successive round, the base stations being funded are less economic for the mobile network operators.  

“This fact, and the results from round five, suggest that fewer sites are likely to be successfully funded if future rounds are held under the existing program design.”

A new hope

Round 5A will test solutions in certain areas, including those prone to national disasters like bushfires, low population density areas, and major regional and remote transport corridors.

But it’s the conditions for how government money can now be used that will be of most interest to the industry, which had called for change through the first few months of the year.

Vocus called for new models, such as separating the tower and backhaul components of a build, or funding white-labelled networks.

It argued the existing program had not brought competition to blackspots.

Telstra, meanwhile, threatened to take backseat on future rounds of the blackspots program, arguing the economics of new builds was diminishing as they served fewer and fewer people. 

The telco also sought permission to use funds for ongoing operational costs of a tower, not just to part-fund the initial capital cost.

In its review, the government indicated it is listening.

“While the program has been highly successful, the economics of new base stations is shifting as the program moves into more commercially marginal markets,” it said.

“Internationally, new infrastructure sharing models are emerging that promise the delivery of competitive mobile coverage to previously uneconomic regional and remote areas.

“It is an appropriate time to seek stakeholder views on the design of the next round of the program, to identify opportunities and lessons learnt, in order to ensure it continues to deliver high value outcomes to regional and remote Australia.”

The government claimed that 28 percent of towers built under the first four rounds of the program had more than one carrier’s equipment co-located on the one mast.

Still, it pointed to a tightening of the program in this regard.

In round 5A, proposals that involve more than one mobile network operator will have the priority. 

This should fix the current situation where telcos negotiate for shared access after the tower is built.

The government is also willing to test radio access network (RAN) sharing models, as well as tower sharing by “complementary” partners, such as a single tower that might provide fixed wireless and cellular services from different providers.

Additionally, in light of Telstra’s criticism, the government has indicated it could fund a greater proportion of the cost of new tower builds, and allow capitalisation of backhaul lease costs.

“It is proposed that Round 5A will permit funding recipients to capitalise the costs of leased

optical fibre and microwave backhaul,” it said, though it added that “applicants will remain responsible for ongoing operational and maintenance costs for base stations”.

The government also said it may prioritise new builds that are resilient to natural disasters such as bushfires, and that also involve co-contributions from the states and other sources.

The review is being conducted ahead of an $80 million sixth round of the program, and was announced simultaneously with the round five winners.

Telstra, Optus, Vodafone and Field Services Group secured funds in round five.

Optus said in a statement it had landed funding for 83 new towers.