Telstra says it will face “tough trade-offs” between containing costs and investing in mobile infrastructure if it’s forced to pay to fill regional service coverage gaps in exchange for discount spectrum licences.
The carrier was responding to a recommendation by the Australian Communications Consumer Action Network (ACCAN) that mobile network operators (MNOs) be required to fill the coverage gaps in exchange for having their expiring spectrum licences renewed.
In a position paper on the issue, ACCAN estimated that the Australian Communication and Media Authority’s (ACMA’s) preferred approach to renew rather than competitively auction the licences will shave at least $900 million off their original cost of $8.2 billion.
It argued that MNOs should be required to use these savings to invest in remote and regional blackspot infill.
It also criticised the ACMA’s preferred approach of relying on government cofounding programs as inferior to overseas examples such as France, where obligations saw 4G coverage expand from 45 percent in 2018 to 88 percent by Q3 2023.
However, a Telstra spokesman told iTnews that even the revised cost for the sector to renew its licenses is too high and that ACCAN’s framing of the issue is flawed.
“We believe the ACMA’s latest proposed pricing is significantly above what a fair market price today would be,” Telstra’s spokesperson said.
“Australia already has a fiercely competitive mobile market. Recently inflation data shows the communications sector has delivered falling prices (in real terms) over the past decade, yet at the same time invested heavily so that more customers than ever before can do more things in more places.
“Telstra intends to continue to invest – but high spectrum prices will force tough trade-offs between managing our costs and investing in the future.”
However, to bolster its case for the licence conditions, ACCAN seized on comments made by industry lobby Australian Telecommunications Alliance’s (ATA’s) chief executive Luke Coleman mid last year.
At the event, Coleman said that while the blackspot funding programs had been successful, the business case for building new towers had weakened and that carriers were increasingly looking to satellite economics to fill gaps in remote and regional services.
Reflecting on his time as a ministerial advisor to former Liberal Communications Minister Paul Fletcher, Coleman said:
“Each subsequent round of that [mobile blackspot] program, the amount of investment that industry is willing to contribute has tapered off to effectively zero,” Coleman said.
“We have reached the geographic and economic edge of where telcos are willing to invest in terrestrial mobile infrastructure. Now, the business case does not stack up.”
Coleman went on to explain the average cost to build a mobile tower under the blackspot program was about $1.3 million and that, in cases where populations being served were sparse, the business case for satellite and direct-to-device connectivity became far superior.
“I say at least largely because of course, satellite doesn’t give you the full capabilities of 4G or 5G. You’re not going to be watching YouTube videos or cat videos on Facebook in the same way that you would on your mobile handset connected to 4G or 5G.
“But for safety, to be able to make a voice call if you’re in an accident, if your tire blows up on a remote road, it completely changes the game,” Coleman added.
ACCAN also praised the blackspot program but said statistics it drew on from the French example and Coleman’s comments meant that the prospect of carriers making “further material investments in terrestrial network infrastructure is limited” – either on their own or under government co-funding arrangements.
The industry has become overly reliant on the government mobile blackspot co-funding scheme, according to ACCAN.
It calculates that the proportion of new sites built in new areas using co-funding arrangements increased from 50.5 to 59.6 percent between 2021 and 2025.
For remote areas, co-funding accounted for a rise of 30 to 59.6 percent in the same period.
“Both TPG and Optus have not invested in new sites in very remote areas for 2025, and their investment activity in remote and outer regional areas remains limited,” ACCAN stated in its position paper.
In lockstep with Telstra, the ATA hit back at ACCAN, telling iTnews that its policies would make it harder for MNOs to deliver faster mobile broadband and resilient networks.
It also took aim at ACCAN’s use of the French policy example, saying the country trails far behind Australia for mobile network excellence ranking at 32 compared to 10 for Australia.
The UOMO conundrum
What could prove problematic for the telco sector in the near term, however, is its seemingly contradictory positions on the role of satellite in addressing coverage gaps.
The industry is currently trying to stave off legislation that would require Telstra, Optus and TPG Telecom to provide basic outdoor texting and voice mobile service over 5 million square kilometres of Australia’s landmass, including 37,000 kilometres of road.
The Universal Outdoor Mobile Obligation (UOMO) legislation leans heavily on recent innovations in satellite telecommunications, including Low Earth Orbit satellites (LEOsats) and D2D technology.
Both have been championed by the government and telcos as being capable of vastly improving emergency service communications in remote areas like the Australian outback.
In addition, Telstra has defended its use of LEOsat connectivity to serve as backhaul for remote small cell base stations, despite admitting to parliament’s triple zero inquiry that it has been grappling with a sharp jump in outages since switching from geostationary satellite backhaul around 2024.
TPG Telecom and Telstra have publicly called for the legislation to be delayed to allow for further consultation. on grounds that satellite-to-mobile technology is too immature and that the government hasn’t considered the impact of the legislation on spectrum allocation.
Optus is yet to make any public statements on the UOMO legislation but is understood to hold similar concerns to its two rivals.
For its part, the Department of Communications has defended the legislation, telling iTnews that a consultation process interrogated the technical demands of the legislation thoroughly.
“The UOMO draft legislation was informed by extensive consultation with industry, peak bodies, members of the public and other organisations,” a spokesperson for the department said.
“These views were taken into account and changes were made to the UOMO legislation prior to its introduction to parliament.
“Importantly, the bill provides flexibility to ensure the obligation will not commence if the market is not sufficiently mature.”
The UOMO legislation currently remains before the senate bills committee after it deferred a decision on its fate and that of a raft of other proposed laws late Wednesday until it next meets, which is expected to be in March.