Telstra demands independent expert to assess wholesale cost models

Stan Beer
Friday, 19 December 2008 09:29

IT Policy - Government Tech Policy

Telstra has called for the Australian Government to choose an independent expert to assess the wholesale telecommunications cost models of regulator the Australian Competition & Consumer Commission as well as the carrier's own models. The call in effect seeks to cast doubt on the competence and independence of the ACCC, which is itself a Government organisation.

In an extraordinary demand, Australia's dominant carrier has called on the ACCC to turn over its telecommunications cost modeling work to an independent third party expert chosen by the Minister for Broadband, Communications and the Digital Economy, currently Senator Stephen Conroy.

According to Telstra, only a cost model expert can remove doubt over pricing of wholesale voice services and access to its copper wire.

The call came after the ACCC today commenced a public consultation on a model commissioned for regulated fixed network services.
 
The model, commissioned by the ACCC, can estimate a price for access to Telstra's copper wire network by infrastructure based service providers to supply broadband and voice services. The model can also estimate prices for resellers of Telstra's wholesale voice services.
 
Telstra’s Group Managing Director of Public Policy and Communications David Quilty said Telstra had spent more than $2 million developing its own cost model and would be happy to hand over its work to the selected independent expert for rigorous assessment.
 
“We are confident our model would stand up to expert scrutiny. For a decade Telstra, the rest of the industry and the ACCC have been in dispute over the costs of the underlying fixed network,” Mr Quilty said.
 
“This intractable situation will only be resolved if the cost modelling work that underpins future access pricing is undertaken by an independent expert and we can establish an agreed, world-class costing methodology.
 
“Unless this occurs no one will have faith in the accuracy of the outcome and there will always be question marks over the appropriateness of any regulated price.”
 
Mr Quilty said 21st Century regulatory best-practice required the body that establishes the pricing methodology to be at arm’s length from the ACCC.
 
“It is a critical time for the future of the industry and it is unacceptable for the current arrangement, with its sub-optimal lack of an appropriate division of responsibilities, to continue,” he said.
 
“The ACCC must have the courage of its own convictions and request the Minister, on the advice of the Productivity Commission, choose a world-leading cost model expert to test both its and Telstra's models to establish a robust framework for setting prices in this crucial industry.
 
“If the ACCC is not willing to subject its model to such scrutiny, the Minister should intervene so the current imbroglio is not allowed to continue to hold back investment, innovation and real competition.”