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Improving mobile coverage
and choice
Dan Lloyd
Director of Strategy & Corporate Affairs
• 21 April 2015
The new Vodafone
• +$3bn investment has delivered a new world class network.
• 40% larger regional footprint since 2010.
• More than two million 4G customers.
• TIO complaints down 50% in 12 months.
• Return to customer and revenue growth
Vodafone driving innovation & competition
wherever possible
3
• Worry free plans: Infinite calling,
international minutes, data workout,
$5/day international roaming.
• Content: Stan, Fairfax and Spotify.
• Local care: $12m Hobart Centre
make us one of the largest private
employers in Tasmania.
• Retail expansion: 30 new stores in
Q4 2014 - one of the largest retail
expansions in Australian history.
• Delivering value: Expanding into
business.
Imitation is the best form of flattery
July, 2013 – Vodafone launches $5-a-day
international roaming
August 2013 – Optus introduces
$10 flat-price travel pack (limited data)
September 2013 – Telstra cuts the cost of
roaming
December, 2014 – Telstra launches
International Travel Pass
Vodafone still the market leader
The mobile revolution has just begun…
Source: Google Our Mobile Planet 2014
Great competition and choice for
metropolitan mobile customers:
•Mobiles delivering $33bn to
the Australian economy.
•Very high smartphone
penetration.
•Three large high quality 4G
networks.
•Good price levels.
•Game changing opportunities:
•Machine to Machine
•M-Commerce via NFC.
50.00%
55.00%
60.00%
65.00%
70.00%
75.00%
Smartphone Penetration
4
Regional Australia: Not just about
coverage, its about choice
6
•Australia has one of the most
distorted regional mobile markets
in the world. Very high market shares
for the incumbent in the 70-98.5%
marginal areas.
•Monopoly for 1 million km2.
of regional
consumers agree that
a choice of mobile
provider is important
83%
In the next ten years Telstra
could receive more than
$3bn in USO subsidies.
This won’t deliver new
services, more choices.
Historic approach… subsidise one of the world’s
most profitable Telcos…?
What’s wrong with the USO?
• Wasteful: USO areas are being
overbuilt by NBN’s fixed wireless
network
• Out of date: Only delivering a
‘standard telephone service’
• Anti-competition tax: It restricts
investment and protects Telstra from
competition.
7
Insufficient attention to competition in spectrum
11
Telstra has access to 60MHz of 1800MHZ regional spectrum that could be used for
mobile services.
Lack of access to this spectrum has limited the ability to invest in competition for
regional Australia.
It also makes it harder to participate in the Regional Blackspots programme.
Telstra
63%
Unallocated
Optus
Regional spectrum holdings
(23% pop)
6%
19%Vodafone
12%
Why is this dominance bad for Australia?
• ~70% higher than the OECD
average.
• Fixed line broadband penetration
is below the OECD average (on
par with Spain, Slovenia and
Greece).
35.4 35.77 37 37.4841.63
51.93
57.91
65.08
10
20
30
40
50
60
70
Ge
rma
ny
US
A
Fra
nc
e
OE
CD
av.
UK
NZ
Jap
an
Au
stra
lia
$U
SD
Incumbent fixed voice costs(medium user)
Source: OECD
Less investment, less innovation, higher prices.
Consumers miss out.
9
Better alternatives on the table…
NBN
• Delivering a better solution
than the current USO regime.
• Open access.
• USO funds will reduce the
market distortions of the
NBN.
• Avoids taxpayers’ funds being
used to duplicate
infrastructure.
13
Black spots program
• Mobile now an essential service.
More funding means fewer black
spots.
• A fair, pro-competition model.
Encourages co-build and sharing of
sites and transmission.
• Infrastructure sharing is the long
term solution.
Incumbent New entrant Single
infrastructure
Facilitate industry co-investment
Co
vera
ge
Opportunities for co-investmentInfrastructure sharing could deliver a
‘win-win-win’ :
• Avoidance of duplication.
• Sharing operational costs.
• Improved economics to increase
coverage and increase the
addressable market.
Incumbent could substantially reduce
costs.
New entrants’ investments become
more viable.
Consumers get more choice, innovation
and coverage.
Delivers more coverage and choice
14
The issue is not a shortage of money, but
fragmentation and mixed policy priorities…
15
$$$NBN fixed wireless spend
$3 bn
USO funding
~ $3bn
Telstra, Vodafone and Optus status quo spend
+$2.5 bn
Emergency services /State Govt
~$800m
Govt blackspot programmes
~$200m +
NPV of projected spends in 80-99% area over 10 years
The issue is not the funding nor the technology, it’s
incentives and the policy to bring the funds together.
Policy priorities to facilitate effective sharing and
competition for all Australians
1. Review of backhaul pricing
ACCC must finally establish appropriate backhaul pricing.
2. USO reform
Use the funds for fixed and mobile and to deliver coverage and choice.
Build on the Mobile Blackspots programme
3. NBN an enabling platform for fixed and mobile services
• Regional access backhaul
• NBN fixed wireless should deliver improved mobile services.
4. Spectrum reform
Closer attention to competition implications of spectrum allocations.
5. Infrastructure sharing/collaboration
This is the norm internationally. The lack of this in Australia is holding
regional Australia back.
16
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