| Telstra pronounces FTTN talks dead |
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| by Stuart Corner | |
| Monday, 07 August 2006 | |
  
Telstra's head of regulatory, Phil Burgess said that he had held conversations with ACCC chairman Graeme Samuel on Friday August 4 and on Monday morning August 7 that had been "substantive frank and civil and [had focussed] on issues that continue to divide us, especially cost issues," but had been unable to agree. Burgess said the issues that remained related to two things "actual costs and the way those costs would be recovered...When we spoke this morning we agreed that we had reached an impasse and that it was only fair to inform stakeholders that talks have failed." However Samuel was contacted by an Associated Press representative during the conference who then told Burgess that Samuel had claimed to be "extremely disappointed" at Telstra's decision to abandon the discussions. In practice, Telstra would have to submit an access undertaking containing the technical and commercial details of how other carriers, 'access seekers' would gain wholesale access to its FTTN. The ACCC would be obliged to put this out for public discussion and then make a decision to accept or reject it. However Samuel had asked Telstra to put out a preliminary document for industry discussion. Burgess said "The ACCC was not able to give us the green lights we need to proceed. As a result we will not be submitting an access undertaking to build the FTTN. Because we will not be submitting an access undertaking there is no point in submitting a discussion draft for industry review." However a detailed technical overview of the proposal was due to be posted on Telstra's Now We Are Talking website www.nowwearetalking.com.au on Monday 7 August. Burgess claimed that provisional agreement had been reached on many issues. "These talks were not scuttled by [the question of competitive] access. Early on we made a major concession to keep these talks going and that was to design an FTTN access regime that would provide competitive access on commercial terms that could be approved by the ACCC....equivalent to those available to Telstra's own retail unit. "We even reached agreement on the cost of capital... on the take-up rate used to determine the costs of the service. We reached provisional agreement on a wide range of very difficult issues...We almost got there but we did not make it." Burgess said the talks had failed "because in our view we faced clashing world views on the issues of costs...Not on the principles relating to high cost areas but on the level of funding required to deliver services to premises outside the FTTN footprint in regional rural and remote Australia as well as suburban areas outside the FTTN footprint. "When you can't agree on costs it is impossible to agree on price and we are here today because of our different views on costs lead to irreconcilable differences on price...In our discussions we centred in on costs that were as low as $1.77 cents per month to $13.63 per month. Those are very difficult gaps to fill. He laid the blame on the ACCC taking a different "world view" to that of Telstra and the Government which is to provide uniform national price averaging to generate funds to subsidise the bush. The ACCC's world view is that wholesale pricing must be de-averaged and cost-based. However, he claimed that "When all is said and done the problem is not between Telstra and the ACCC but between the policymaking arm of Government and the ACCC. The Government needs to get its house in order before there will be any progress on FTTN talks. Until then Telstra shareholders will be caught in the crossfire of conflicting policies and approaches within the government." However the government has stated quite clearly that there will be no change in telecommunications regulation to give Telstra what it claims to need in order to commit to an FTTN rollout. Back in April The Australian Financial Review claimed to have knowledge of a letter from communications minister Helen Coonan to to prime minister, John Howard, informing him of "a significant breakthrough" in FTTN negotiations and telling him that she believed Cabinet would be able to resolve the FTTN and ULL issues and finalise plans for T3 before the May 9 budget. |
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