Rewarding Excellence !

When the first mobile phone became a reality, the instrument was about the size of a house brick and the cost of a call usually totalled several dollars.  There were numerous black spots in the city - where calls would suddenly drop out and incur new connection costs, but they were totally unreliable in the country.   It was a common sight to see people - mobile phone in hand - heading for the high ground in the hope of receiving a signal.

Things are very different today.  There is the expectation that those travelling in a car on state country roads will be able to have an uninterrupted conversation on their mobile phones and the same conditions apply to those using the train service.   We are rarely out of sight of a distant mobile phone tower, nomatter how much some people object to their presence.

The vast majority of those country phone towers were installed and paid for by Telstra, and we have just had a decision by the Australian Competition and Consumer Commission ( ACCC ) to allow Telstra to make sole use of the towers under its control.   It was ruling on an application by Telstra's competitors to force Telstra to share their towers with competing mobile phone service providers.

Because Telstra delivers coverage reliability it charges a premium on country mobile services and its competitors argued that a plethora of costly competing mobile towers made little sense.  It would be better if all providers shared the network, and paid Telstra a fee for the use of their towers.

That ignores the principle that an innovator is entitled to a reward for excellence.  Telstra spent its company capital installing mobile phone towers to improve country coverage and as a result the vast majority of rural mobile phone are connected to the Telstra network.  It loses that advantage if its competitors muscle in and provide equal reliability.

Telstra also sounded a warning that if this sharing was forced upon them, the incentive to extend its mobile towers to parts of the country experiencing less reliable coverage would cease.   Other suppliers would be unlikely to step in and spend their money when the usage rewards were not great and it would condemn remote area to permanent isolation.

That ACCC decision is also sending a message to the entrepreneurs of the future.  Not so long ago the very idea of each person having an individual mobile phone and the ability to make calls on the move was science fiction.  In fact the comic books depicted Dick Tracey with a phone in his shoe ?

It is certain that science will deliver new wonders in the future, and innovators will need to decide whether to risk their capital developing such ideas.  ACCC has signalled that it respects the principle that the innovator is entitled to be rewarded for the risk of developing systems.  Had the decision gone the other way, the development of promising innovations may not have progressed swiftly or at all if the safety of the capital was deemed to be at risk.