Turnbull’s mobile black spot blind spot

The Communications Minister’s recent comments on the $100m mobile black spot program are creating uncertainty and may provoke Telstra to play hardball in NBN Co negotiations.

Malcolm Turnbull has been in the news lately for all the wrong reasons, with focus on dinner dates and public spats with high-profile journalists drumming up unwelcome leadership speculation.

This kind of attention detracts from the Communications Minister’s complex and formidable task of somehow salvaging the massive train-wreck of the National Broadband Network -- and away from the important decisions and negotiations made along the way.

This week, Turnbull said that the NBN would be used to provide infrastructure for the mobile network operators.

During the House of Representatives Question Time, the Member for Indi, Cathy McGowan, asked the Minister to provide details of how the government would respond to the problem of mobile cellular black spots.

The government has identified over 1800 black spots and aims to reduce this number by 250 with the $100 million committed before the last election to provide the Mobile Network Expansion Programme and the Mobile Black Spot Programme.

The pre-election funding commitment has not been without controversy, with the telcos bidding for the funding to build black spot mobile cellular towers at loggerheads.

Telstra argued in its submission to the government discussion paper on the matter that it is the only mobile cellular carrier that has the national mobile cellular and backhaul networks necessary to successfully win the tender for both programmes.

With subsequent funding Telstra’s network can be expanded to fill in all of the black spots.

Vodafone and Morrow

In November 2013, while he was Vodafone’s chief executive, Bill Morrow called for the government to utilise the NBN to permit mobile network operators to expand their networks.

Writing in The Australian on the morning prior to the release of the Vodafone-commissioned McKell Institute report Superfast broadband, the future is in your hands, Morrow said “the time is now right to look at how we can use the NBN to deliver the needs of consumers for the decades ahead”. Morrow went on to write “the NBN’s focus as a fixed-broadband solution needs to be expanded to include mobile”.

Morrow’s appointment as NBN Co CEO was an astute move by the government as it found in Morrow a person speaking their language who would be a forceful and motivated leader at NBN Co.

Telstra Negotiations

McGowan went on to ask Turnbull if the government would use the NBN wireless towers to provide mobile cellular coverage in the remaining black spot locations, thereby speeding up the black spot reduction program.

In response, Turnbull said, “Yes and that is in fact what our policy is.”

Who would argue with that? … Telstra, possibly?

At a time when the government and NBN Co are re-negotiating the Telstra agreement, is it wise to be attacking one of Telstra’s key strengths?

Telstra’s single most important marketing advantage over Optus and Vodafone is the coverage available on its mobile network. In regional and remote Australia, Telstra has more than 60 per cent market share.

Telstra CEO David Thodey recently stated that “Telstra supports … a wholesale-only NBN and the progressive structural separation of Telstra”.

But does this include the NBN being used to undermine Telstra’s mobile network advantage?

And what of Thodey’s remarks that Telstra’s focus in the re-negotiation of the NBN Co-Telstra agreement will be to protect and potentially enhance shareholder value?

Will Thodey use the renegotiation as an opportunity to put a spanner in Turnbull’s spokes?

Telstra could negotiate a separate confidential agreement to prevent the NBN being used to provide wholesale mobile cellular and Wi-Fi products.

Does such a confidential agreement already exist? Why has NBN Co so far failed to provide wholesale mobile cellular and Wi-Fi products, and why has it failed to offer products that would connect trains, planes, buses, boats and motorhomes to the NBN?

Does the government want NBN Co to be an effective and financially viable wholesale bitstream provider?

Delays and roundabouts

The Australian Financial Review’s report on May 29 that the renegotiation of the NBN Co Telstra agreement is likely to drag on into the second half of this year comes as no surprise.

Earlier this year, Turnbull told Fairfax Media that NBN Co and Telstra were “very close to each other”. Similar remarks were made by the former communications minister Stephen Conroy in the early months of what turned out to be an 18-month marathon negotiation to finalise the original NBN Co Telstra agreement.

It is unlikely that Telstra will finalise the re-negotiated agreement until Turnbull’s game of NBN reviews and audits has ended and Telstra’s team of negotiators has had a chance to fully digest the outcomes and recommendations. Even then, the changing telecommunications market landscape -- including TPGs cherry-picking and purchase of spectrum suitable for mobile -- should give Telstra sufficient reason to slow down the negotiations until some clarity is achieved.

In February, Thodey said, “We think it’s in everyone’s interests to get it done quickly, and the middle of the year seems reasonable … however, we’re really driven by the government’s agenda on this one.”

Does Telstra look at the polls? Should Telstra take into account the possibility that the government could lose the next election?

A question for Turnbull

In his response to McGowan’s question, Turnbull went on to say: “We have instructed the NBN Co to, wherever possible, find opportunities where it can offer collocation and support for mobile network operators. There are a number of areas -- it is not the majority of the 2700 towers that will be established for the NBN -- where there is fixed-wireless coverage under the NBN Co planned where there is no mobile phone coverage or mobile phone coverage of poor quality, or mobile phone coverage from only one of the three carriers.”

Turnbull’s remarks don’t go anywhere near Morrow’s vision, appear to restrict what towers will be made available to mobile network operators, and also appear to be targeting locations where Telstra is the only mobile network operator providing coverage.

So the question that Turnbull should respond to is, why limit where mobile network operators can use NBN infrastructure -- surely it is in the best interest of consumers and taxpayers to provide open access to every one of the 2700 mobile towers being built for NBN Co?