More rural rules doesn’t necessarily lead to more bars on your phone

A new report from the Telecommunications Industry Ombudsman makes the problem plain: seven million Australians living outside the major cities are dealing with patchy mobile coverage, months-long waits for technicians, and outages that cut them off from emergency services. The report, based on analysis of nearly 27,000 complaints, calls for an overhaul of the regulatory framework. That call is understandable. But the question of whether more regulation actually fixes the problem deserves an honest answer before the government reaches for that lever.

The ombudsman's findings are not really in dispute. Coverage is poor and unreliable. Planned and unplanned outages create safety risks. People in remote areas often have no fallback option when their primary service fails. The existing legislation, drafted when the telecommunications landscape looked nothing like it does today, has been patched and amended so many times that it has become its own kind of obstacle. The ombudsman calls this "piece by piece" regulation, which is a polite description of what is, functionally, a regulatory maze.

The 12 recommendations she puts forward are a mixed bag. Some are sensible operational fixes: pausing charges when customers are waiting for a technician, reviewing authentication requirements that force remote residents to travel hundreds of kilometres to a physical store. Those are not regulatory burdens on telcos so much as consumer protection basics, and they are hard to argue against.

Tougher standards on a marginal market change the investment calculus

The harder question is what happens when you bolt tougher service standards and compliance obligations onto a market where the economics of rural coverage are already marginal. Building and maintaining mobile infrastructure in remote Australia is expensive. The population density that would make it commercially attractive is, almost by definition, absent. Telcos invest where the return justifies the cost. Increase the compliance cost of operating in regional areas, and you shift that calculation, not in the direction the ombudsman intends.

This is not a theoretical concern. The ACCC has already launched a year-long inquiry into regional mobile coverage, including a look at domestic roaming — the idea of forcing telcos to share networks in areas where a competitor has coverage but your own carrier does not. As The Bearing has covered, mandatory roaming is a reasonable response to a real problem, but it carries a structural risk: if Telstra knows that a competitor's customers can ride its network whenever coverage gaps appear, the commercial logic for Telstra to close those gaps weakens. You get free riding on existing infrastructure rather than new investment.

If meeting a regulatory standard in a low-density area costs more than the revenue the area generates, the rational response is not to invest more. It is to lobby for an exemption, to run down existing infrastructure to the minimum compliant standard, or to exit the market in ways the regulator didn't anticipate.

The same dynamic applies, more broadly, to heavy-handed service standards. If meeting a regulatory standard in a low-density area costs more than the revenue the area generates, the rational response is not to invest more. It is to lobby for an exemption, to run down existing infrastructure to the minimum compliant standard, or to exit the market in ways the regulator didn't anticipate. This is not cynicism about corporate behaviour. It is a straightforward reading of how incentive structures work, and it is the same mechanism that has produced poor outcomes in other heavily regulated utility markets.

A cleaner framework beats a higher compliance stack

None of this means the ombudsman is wrong to call for a review. The current framework is genuinely not fit for purpose, and doing nothing is also a choice with consequences. The case for establishing Statutory Infrastructure Provider service standards with real teeth is stronger than the case for simply layering new compliance requirements on top of the existing mess. A cleaner, simpler framework that creates clear obligations and genuine accountability, without turning every service failure into a compliance event that makes rural operations commercially unviable, would be a meaningful improvement.

The government should also look seriously at what role public investment plays here. Where market economics cannot deliver adequate coverage, the choice is not between regulation and the market. It is between targeted subsidy and absence. The Mobile Black Spot Program has directed public money toward exactly this problem, with mixed results that suggest design matters as much as funding. If the government is going to spend money on rural connectivity, the question worth asking is whether the rules it writes around that spending give telcos a reason to go further than the minimum the money buys, or simply to take the subsidy and stop there.

The ombudsman's report is a useful account of what is going wrong. The harder work is designing a response that makes better coverage the commercially rational choice for telcos, rather than simply the legally required one. Those are very different incentives, and they tend to produce very different outcomes on the ground.

Sources

Telecommunications Industry Ombudsman — Regional, Rural and Remote Report 2026

The Conversation — Regional and rural Australians 'left behind' by telco services – new report

The Bearing — The realities of a mega-telco for the bush

Frequently Asked Questions

Why is mobile coverage still so bad in regional Australia?
Building and maintaining mobile infrastructure in remote areas is expensive, and the population density that would make it commercially attractive is largely absent. Telcos invest where the return justifies the cost, which means low-density regions are structurally underserved regardless of what the rules say.

Would forcing telcos to meet stricter service standards fix the problem?
Not necessarily, and it may make things worse. If complying with a service standard in a low-density area costs more than the revenue that area generates, the rational response for a telco is to seek exemptions, run down infrastructure to the minimum compliant level, or exit in ways the regulator didn't anticipate. Tougher rules can reduce the commercial incentive to invest rather than increase it.

What is domestic roaming and why is it controversial?
Domestic roaming would force telcos to let competitors' customers use their network in areas where the competitor has no coverage of its own. The problem is that if Telstra knows rivals' customers can ride its network, the commercial logic for Telstra to build out its own coverage in those gaps weakens — you get free riding on existing infrastructure rather than new towers.

Has the Australian government already spent money on fixing mobile black spots?
Yes. The Mobile Black Spot Program has directed public funding specifically at coverage gaps in regional and remote Australia. The results have been mixed, pointing to the conclusion that how subsidy schemes are designed — particularly whether they give telcos an incentive to go beyond the minimum — matters as much as how much money is spent.

What should the government do instead of adding more regulation?
The stronger path is a cleaner, simpler framework with clear obligations and genuine accountability, rather than layering new compliance requirements onto the existing regulatory maze. Where market economics cannot deliver adequate coverage, targeted public subsidy is the practical alternative — but only if the rules attached to that spending give telcos a reason to invest beyond the minimum the money buys.