The Government-enforced ban on Huawei equipment for Australia’s 5G network is strengthening Telstra’s grip on the market, according to the boss of a rival telco.
Vodafone Australia CEO Iñaki Berroeta this week warned that the ban would have “significant long-term implications” and that “compensation should be considered” for affected telcos.
“While we of course respect government decisions that are made as a result of national security concerns, the implications of this decision are substantial,” he said, speaking at the CommsDay Summit in Sydney this week.
“There is a very material impact on the industry, but one that is not being felt by the largest mobile operator [Telstra]. This, in turn, gives that operator a huge advantage going into 5G.”
In August of last year, following months of speculation, then Acting Minister for Home Affairs, Scott Morrison, confirmed that the Federal Government would opt to leave Chinese-owned companies Huawei and ZTE out of its plans for Australia’s 5G network by announcing new Telecommunications Sector Security Reforms (TSSR).
The reforms put responsibility on Australian telcos “to protect Australian networks from unauthorised interference or access that might prejudice our national security,” said Morrison at the time.
It came after concerns were raised around Huawei and its ties with the Chinese government and its intelligence services.
With Vodafone, Optus and TPG (which has since started a merger with Vodafone) all engaging with Huawei for their respective mobile networks at the time of the decision, the decision ultimately benefitted Telstra, which partnered with Swedish equipment vendor Ericsson to build its 5G network.
“Network equipment is a critical input into a fast-moving industry,” said Berroeta.
“Australia has now voluntarily, and well ahead of decisions in many other Western countries, submitted itself to a duopoly,” he said, referring to Ericsson and Nokia, which are the only two companies apart from Huawei and ZTE capable of supplying 5G network equipment to Australia at scale.
Berroeta highlighted how this impacts the local telco market.
“There is a very material impact on the industry, but one that is not being felt by the largest mobile operator [Telstra],” he said.
“This, in turn, gives that operator a huge advantage going into 5G.”
Never specifically naming Telstra, rather referring to it as ‘the incumbent’, Berroeta compared the treatment each telco had received from the Government.
“Whenever the incumbent has been impacted by a major government decision – most recently the NBN – it has been compensated. And I do wonder if compensation would have been involved if the incumbent had been negatively impacted by this ban,” he said.
“I need to point out that VHA [Vodafone Hutchinson Australia], and Optus for that matter, are not being compensated for the substantially increased costs of this government decision.”
JPMorgan recently found that Telstra now has a 47.4% postpaid mobile market share in Australia.
In the United Kingdom, although the government is yet take action similar to Australia, Vodafone UK has pledged not to use Huawei equipment in the construction of its 5G network.