TPG: ‘No credible business case’ for mobile network without Huawei

Without a realistic upgrade path to 5G there is “no credible case” for TPG to resume its rollout of Australia’s fourth mobile network, the telco has argued.

In a document filed with the Federal Court, TPG repeated its claim the government’s decision to stop Australian telcos from using equipment from Huawei in their 5G networks had effectively killed the business case for its network.

TPG is listed as a respondent in a case brought by Vodafone Hutchison Australia (VHA). The key target of the action, however, is the Australian Competition and Consumer Commission (ACCC). VHA and TPG are seeking to have the court rule that a merger between the two of them would not substantially lessen competition in the Australian telco services market.

Earlier this month the ACCC revealed that in its view a TPG-VHA merger would be a blow to competition in an already-concentrated market and that it opposed the proposal. A key argument made by the ACCC is that in the absence of a merger, TPG would be pushed towards resuming its rollout of a mobile network.

In April 2017, TPG announced it would become Australia’s fourth mobile network operator (MNO), using the spectrum licences it had already accumulated to help it deliver services in major cities.

Although it had begun installing mobile infrastructure and even released details of its initial mobile product based on the network, in January 2018 it announced it would cancel the rollout. That announcement came in the wake of the ACCC revealing, a month earlier, that it was concerned about the TPG-VHA merger proposal. Among its concerns were that the deal would rob Australia of the opportunity to have a fourth MNO.

TPG, however, said its decision was linked to the government’s decision to ban the use of Huawei for 5G, which Canberra has argued is necessary on national security grounds.

The document filed by TPG reiterates the role of the Huawei ban in cruelling its MNO ambitions.

TPG says its mobile network would have “predominantly comprised small cell sites that would be used for both coverage and capacity, rather than primarily for complementing macro RAN sites or providing additional capacity in a specific location”.

TPG claims that its network would have been the first in the world to mainly use small cells and low-band spectrum for both coverage and capacity.

The document states that TPG’s decision to end its mobile network rollout followed two meetings between the telco and federal government representatives.

TPG holds spectrum in the 700MHz, 1800MHz and 2600MHz bands. In addition, a joint venture formed with VHA shortly after the two announced their intention to merge was the second-highest bidder in the government’s auction of the 3.6GHz band. Spectrum in the band will be used to deliver the first 5G services in Australia, with Telstra and Optus already launching their first products based on the 5G standard.

TPG's planned network would have used more than 4860 small cell sites and 630 macro sites. The network relied on baseband units (BBUs) that acted as a hub for multiple remote radio units (RRUs), with the intention of shifting “most of the processing power and traffic management technology” in TPG's radio access network (RAN) from the utility-pole-mounted RRUs to the BBUs.

Huawei would have been able to supply TPG with a 5G active antenna unit (AAU) that could be installed on utility poles, with the unit being the equivalent of the RRU and passive antenna used to deliver 4G.

TPG lacks sufficient spectrum to effectively compete with a RAN based predominantly on macro cell sites, the telco argues. The proposed design would have enabled an upgrade to a Non-Standalone (NSA) 5G network that supported both the newer mobile standard and 4G services.

TPG claims that there no alternative vendor to Huawei that can, in a reasonable timeframe, deliver TPG with a technical solution allowing the deployment of an NSA 5G network using pole-based small cells and the telco’s current spectrum.

The “5G solutions available for macro RAN sites are larger, heavier and higher-powered than the kind of solution that TPG can deploy on a utility pole,” the telco argued.

During the ACCC’s scrutiny of the merger proposal TPG produced approximately 5100 documents for review by the competition watchdog, as well as made six presentations alone or with VHA representatives, made a dozen submissions and provided a number of expert reports to the commission. VHA says it handed over 25,537 documents to the commission.

VHA has argued that without a merger, the quality of its mobile services will suffer as it struggles to meet demand.

Copyright © 2019 IDG Communications, Inc.

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