ACCC expects Telstra’s NBN rivals to grow market share in regional Australia

The Australian Competition and Consumer Commission (ACCC) believes that once the rollout of the National Broadband Network is complete, Telstra’s competitors may be able to eat away at the telco’s market share in regional areas.

At a national level across all NBN technology types, Telstra has a wholesale market share of 49 per cent of all services, down 1 percentage point on the prior year, according to figures included in the ACCC’s Communications Market Report 2018-19. It’s followed by TPG (owner of iiNet and Internode) with 22 per cent, Optus with 14 per cent, and Vocus Group (whose brands include Dodo and iPrimus) with 8 per cent.

In metropolitan areas, Telstra’s market share as of June 2019 was 40 per cent, down from 41 per cent in June 2018, states the ACCC report, which was released late last year.

At NBN Co’s regional Points of Interconnect (POIs), however, Telstra has held a 55 per cent share of the market for three years running.

The ACCC said that it expected the NBN market in regional areas could increasingly mirror the pattern of metropolitan areas, cutting into Telstra’s dominance.

“When structural reform of the fixed line sector is complete, following the rollout of the NBN, the competitive landscape in regional Australia, where Telstra’s competitors hold just 45 per cent of the wholesale market may begin to mirror metropolitan areas where Telstra’s competitors account for 60 per cent of wholesale market share,” the report stated.

“Over recent years we have observed that competition from challenger brands has ensured that Telstra’s customers, including those in regional areas, are able to benefit from the increasing value being offered in communications markets as a whole.”

5g vs NBN?

The ACCC report said that downloads for the three months ended 30 June 2019 were up 47 per cent on the prior comparable period in 2018, reaching more than 5.98 exabytes. Eighty eight per cent of that data was downloaded using fixed broadband services.

Figures from the Australian Communications and Media Authority (ACMA) reveal that as of June 2019, 16 per cent of Australian adults relied only on mobile services for Internet access, down from 23 per cent in 2014 (people relying on mobile voice and Internet only was 12 per cent in 2014 and 2019).

However, the ACCC said it believes that the rollout of 5G by Australia’s mobile network operators could reverse that trend.

“As the capabilities offered by 5G and NBN services converge, MNOs may market their services as substitutes to NBN services, and we see no impediment in them doing so in a manner that complies with Australian Consumer Law (ACL),” the ACCC report said.

There is “the potential for mobile services to provide a competitive constraint against NBN services depending on how these services are offered and priced.”