The competition watchdog has tentatively decided not to require telcos to open up their regional mobile networks to competitors following a hard-fought battle between the major telco players.
Last September the ACCC revealed it was looking into whether it should declare a wholesale domestic mobile roaming service in order to let telcos offer services in areas they don't cover with their own network.
The inquiry was intended to address issues with a lack of telecommunications choice in regional areas.
But the news drew the ire of the nation's largest telco Telstra, which argued such a decision would act as a disincentive for its rivals to invest in regional areas and allow them to "freeload" off Telstra's own multi-billion dollar regional investment.
Telstra's comments caused a public spat with Vodafone, which accused Telstra of “free-riding on taxpayer investment”.
Issuing its draft decision today, the ACCC said there was not enough evidence to show that forcing regional operators to open up their networks would improve competition.
“We are extremely conscious of the fact that in regional, rural and remote areas, mobile coverage and choice of service provider are vital issues," chairman Rod Sims said in a statement.
"However, the effect declaration would have on competition in regional, rural and remote areas is uncertain."
He said declaring a wholesale regional mobile service could have the opposite effect and make some consumers worse off.
“Currently, regional consumers benefit to some extent from price competition in metropolitan areas because operators price their services consistently across Australia, despite the higher costs in servicing regional areas. They also benefit from competition between operators on network investment," he said.
“There is insufficient evidence to suggest that declaration of a mobile roaming service in regional and rural areas would further lower prices or improve services, given the higher costs in servicing these areas."
The ACCC said it could also - as Telstra had argued - prove a disincentive for other mobile network operators to invest in building out regional networks.
However the regulator indicated it had not given up on finding an answer to the problem.
“While we do not think that mandated roaming is the answer to these problems in regional and rural areas, we are seeking comment on other regulatory and policy measures that could improve coverage and competitive outcomes," Sims said.
It is asking for feedback on its draft decision before it makes a final decision in the middle of the year.
A "missed opportunity"
Vodafone chief strategy officer Dan Lloyd labelled the draft decision "disappointing" and said it would ensure regional Australians would continue to be "held hostage by Telstra".
"It denies the benefits of increased coverage, competition and choice to Australian mobile customers, especially hundreds of thousands of Australians living in regional and rural areas," Lloyd said in a statement.
"Too many Australians ... will have no choice but to pay Telstra’s mobile premium which totals $1.4 billion per year. Since 2006, Telstra has received around $2 billion in government subsidies and funding to build its regional networks, yet it only spends $150 million per year on mobile in regional areas."
He claimed the telecommunications divide between cities and the regions would continue to widen because "no other operator will be able to close the coverage gap" between Telstra and other players.
"Monopolies don’t drive investment, competition does. Without domestic roaming, the opportunities for investment in areas where it is uneconomical to build more than one network are very limited," Lloyd said.
"Vodafone and several other companies committed to increased regional investment if roaming was implemented. It is disappointing for Australian consumers that a scare campaign with no facts or substance has succeeded."