Optus chief opposes intervention

Acting Optus chief and Singtel Consumer Group boss Paul O’Sullivan has shot down calls for the government to rethink the regulatory regime overseeing competition in the mobile sector, saying the system should change only if there are clear signs of market failure.

There has been mounting pressure from Vodafone Australia for the government to intervene in the mobiles market, which has been dominated by Telstra for the past three years.

Under Vodafone’s former chief Bill Morrow, the company lobbied the government for regulatory intervention, arguing that Telstra’s dominance and its ability to funnel the near-monopoly profits from its fixed-line business back into its mobile operations needed to be checked.

For years the telco’s rivals have been concerned that Telstra’s dominance of the fixed-line sector leaves the rest of the $35 billion-a-year industry at a disadvantage when competing for mobile customers, particularly in rural and regional Australia.

But in rare agreement with Optus’s main rival, Mr O’Sullivan said the regulatory regime in the mobiles sector should not be changed if it meant disadvantaging players who had invested billions of dollars in infrastructure.

“We don’t want to start changing the rules on everyone who has been investing in infrastructure over the years,” Mr O’Sullivan told The Australian.

“Government investment in infrastructure for anything other than customer access should only be when there is a clear sign of market failure.”

Mr O’Sullivan’s comments will be a blow for Vodafone, which has not only lobbied for regulatory changes to the mobile sector but also wants to see NBN Co expand its $1.1bn fixed wireless program into a rural and regional mobile network.

Vodafone has argued that the towers used for NBN Co’s fixed-wireless towers should also be used by mobile operators who want to extend the reach of their networks in the bush.

As part of its push for a rethink on regulation, Vodafone has also argued that mobile infrastructure in rural and regional Australia should be shared between the main mobile operators to reduce the cost of serving consumers.

However, any move by the regulator to intervene in the mobile market is likely to trigger lengthy, expensive court battles.

Telstra chief executive David Thodey recently warned that the company would be prepared to take the government to court if it were forced to share its mobile infrastructure with rival players.

Mr O’Sullivan declined to say if Optus would also be prepared to take the government to court in the event of regulatory changes that would also force it to share infrastructure.

He did warn of the dangers of inviting regulatory intervention in markets where competition was strong.

“You’ve got to be careful because once you invite the government in, then you may find the guest stays longer than just for dinner,” Mr O’Sullivan said.