OECD blasts lack of competition, high prices and poor service among Australian telcos

Australia’s major telcos have copped an international pasting, with the Organisation for Economic Co-operation and Development calling out high prices and poor service while suggesting the competition regulator do more to help country mobile customers.

The criticism, which was contained in this week’s OECD’s annual economic review of Australia, comes as the telcos face increased scrutiny after Optus’ triple-0 outage last year that has been linked to two deaths.

The global economic thinktank says the Australian Competition and Consumer Commission could take a harder line by mandating the sharing of telco infrastructure to encourage more entrants in the market, pointing to the impact of more competition on prices in other OECD member countries.

With the Australian mobile market dominated by just three providers — Telstra, Optus and Vodafone — the OECD said entry barriers were particularly high in regional areas, where coverage was often limited to just one country’s network infrastructure.

“This lack of competitive pressure has contributed to relatively high retail prices and limited service quality improvements relative to OECD peers,” it said.

The group noted that mobile customers in France, Canada and Japan had benefited from the sale of spectrum capacity to new operators and the mandatory sharing or roaming services and telco towers.

In France, it said, the decision to reserve blocks of spectrum for new entrants saw prices fall by about 20 per cent and coverage improve.

“In Japan, pro-competitive reforms allowed Rakuten Mobile to enter in 2020, supported by national roaming rights, forcing incumbents to cut tariffs significantly and expand data offerings.”

The OECD noted that the ACCC and the Australian Communications and Media Authority had taken steps to try to improve competition in Australia, but the small comparative size of the market had hindered their efforts.

Also, while the Federal Government’s Mobile Black Spot program aimed to expand coverage, particularly in regional areas, it had “largely reinforced incumbent dominance”.

“It is open to Australia’s independent competition regulator, the ACCC, to mandate infrastructure sharing—both roaming and towers—in underserved regional areas to lower entry costs,” the OECD said.

“In spectrum allocation, the ACMA could consider reserving capacity explicitly for new entrants, allowing for competition benefits, balanced with other policy objectives, with enforceable rollout obligations.

“To ensure new entrants can achieve scale quickly, wholesale access rules should be strengthened. “

Additionally, the OECD said, regional coverage subsidies could be linked to improved competition, rather than just reinforcing the market power of the incumbent telcos.

The Australian Communications Consumer Action Network urged the government to work harder to ensure the market was “robust, reliable and offers value for money”.