Separation benefits inside 12 months: DBCDE

James Riley
Wednesday, 14 October 2009 11:30

IT Policy - Government Tech Policy

Important benefits of proposed telecommunication reforms – including the functional or structural separation of Telstra – would be seen inside 12 months, the Department of Broadband, Communications and the Digital Economy has told a Senate inquiry.

Based on the separation experience of incumbent telecommunications companies in the UK and New Zealand, the department said the process for Telstra could be expected to take five to seven years.

"(But) the big gains are seen very much in the early years," DBCDE Networks and Regulation Branch assistant secretary Rohan Buettel told the committee hearing at Parliament House in Canberra.

"And they have tended to see the important benefits within 12 months," he said.

The Senate communications committee is investigating a telecommunications reform bill that Government wants passed by the end of the year. The committee is due to report on October 26.

Recently appointed department secretary Peter Harris said there was no reason to delay the reforms until after Government’s discussions with Telstra, or until the Government’s National Broadband Network implementation study had been completed.

He said the timely passage of the reforms was essential to remove regulatory uncertainty from the sector. The legislation would provide the framework for the future into which the outcome of the Government discussions with Telstra – whatever that outcome was – would be put.

The proposed reforms should be looked at in isolation from the Government's NBN plans, and was not directly related to them, Harris said.

"It is the Government's view that Telstra's high level of integration has hindered the development of effective competition in the sector, and has contributed to Australia continually lagging behind other developed economies on the availability, price and quality of telecommunications services," Harris told the Senate committee.

"This view is shared by as diverse a set of commentators as the WEF and the OECD with the latter stating in its 2008 economic survey of Australia that 'Telstra's dominance of all platforms makes it difficult to establish effective competition between the various types of infrastructure'," he said.

"The reforms set out in this Bill are designed to promote more effective competition in the sector by addressing the underlying incentives Telstra has a highly integrated company to favour its own retail businesses."

Queried by South Australian Liberal senator Simon Birmingham about why the reform bill didn't simply legislate a structural separation of Telstra if the Minister's stated preference was for Telstra to voluntarily separate, Harris said the company itself was best positioned to identify a business model that "fit the intent" of the policy objective.

Government wanted to avoid applying a "cookie cutter" model through legislation and hoped a constructive outcome would result from the discussions with Telstra.  If an outcome toward Government’s preferred model did not result, the reforms would nonetheless provide a framework for regulatory certainty for the sector into the future.

"The Government's Bill also intends to promote competition across the various telecommunications platforms and to encourage investment by streamlining the access regime," Harris told the committee.

"The Bill also improves the position of consumers in a range of support functions including payphones and consumer compensation for poor performance," he said.

"These benefits promote the interests of all Australian consumers, businesses, including in rural and regional Australia, and the economy more broadly."

Harris also told the committee its legal advice was that the regulatory reforms would not expose Government to compensation claims from any of the industry players or their shareholders.