| Coonan says 'no way' to Telstra's FTTN protection demands |
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| by Stuart Corner | |
| Wednesday, 08 March 2006 | |
  
Addressing the Australian Telecommunications Users Group (ATUG) annual conference in Sydney, Coonan told Telstra that it should use the provisions of the current access regime and apply to the ACCC to obtain certainty on the terms under which it would be required to provide access for its proposed new network. Telstra's response was swift and totally uncompromising. It simply renewed its attack on the current regulatory regime as being the relic of an era long past. "The fact is that Telstra cannot invest in a next generation broadband fibre network unless it has investment certainty, and that certainty is not provided by the outdated regulatory red tape of 1997... It is difficult to understand why the Minister unquestioningly supports the existing regulatory regime of 1997 as adequate, when the world has changed so much since then - the internet boom has changed competition and consumer behaviour dramatically, yet the rusted on regulatory regime remains a relic of another world." However, despite Telstra's condemnation of the current regime, and its refusal at least in public to explore this avenue, Coonan revealed that Telstra was in fact doing so. "Telstra has made moves to discuss its specific proposal with the ACCC to see how the current arrangements can accommodate Telstra's legitimate desire to get a reasonable return on its $3 billion [FTTN] investment." Coonan said she was "sympathetic to Telstra's desire to minimise the risk inherent in major new investments," but, "the logic of exempting such networks completely from the access regime is not compelling. There cannot be automatic exemptions from the regime for investments if they result in new bottlenecks or extend existing ones. This is a principle that would apply equally to all investments - not just ones that Telstra is planning." Telstra has long sought to have telecommunications regulation aligned with less stringent regulation applying to other type of infrastructure, and Coonan was able to use its arguments against it, noting that "An exemption [for a FTTN network] may also have precedent-setting implications for the way new investments are treated in other regulated industries." She noted that, internationally "most countries are continuing to apply their existing regulatory regimes to fibre. There is some limited support for less regulation, but this has not been implemented anywhere except in the US where there is extensive infrastructure competition from cable networks." She conceded that "Telstra needs certainty in advance of making its investment and confidence that the regulatory framework is flexible enough to allow it to obtain competitive advantage from innovative products and to deal with the pricing of third party access fairly and expeditiously," saying that the ability of the current regime to deliver such an outcome should be tested. "I would encourage all investors to use the special undertaking process under part XIC [of the Trade Practices Act] which provides certainty for new generation network investments. I am confident that the special undertaking process can provide certainty to investors about the terms of access (including the access price) that will apply to services provided through new infrastructure - before they invest in building the infrastructure. |
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