Optus CEO says conditions should be put on Telstra $11B payment

Stan Beer
Sunday, 27 February 2011 13:32

IT Policy - Government Tech Policy

Optus CEO Paul O'Sullivan has warned that the NBN needs full transparency of any deals done by Government and Telstra because he claims that $11 billion of payments made to Telstra could distort the market in the early years. At a keynote address to most of the Australian technology media in Queensland today, Mr O'Sullivan used the platform to fire some shots at Telstra as the NBN gets commissioned.

Speaking at the Kickstart conference on the Gold Coast, Mr O'Sullivan warned that the way payments are structured where Telstra gets paid as lines are decommissioned needs regulation. He wants the Government to stop that money from being used to gain a market advantage through cross subsidisation and suggested that he would like to see it paid directly to shareholders.

"We're not asking for any special favours. All we want is for the industry to get a level playing field," Mr O'Sullivan said.

"What we don't want is for Telstra to use that money to cross-subsidise customers, acting in an anti-competitive way. If a line is decommissioned and Telstra loses that customer, we don't want Telstra offering customers say a free TV and free service for a year in order to keep them."

He also warned against NBN Co becoming another Telstra. "We cannot afford for NBN Co to become the British Rail or Telstra of the current century," he said.

O'Sullivan said NBN Co needs an independent oversight board and the management should be put out to open tender.

"This is a body that sits outside of the Government. There is a model for this in Australia already - it's called the Reserve Bank," O'Sullivan said.

According to Mr O'Sullivan, it will be important for the NBN management not to become politicised and called for regular tenders to choose management.

"These tenders could be renewed every 3 to five years. The really critical point is that a series of checks and balances are applied to NBN Co," he said.

Mr O'Sullivan said there needs to be a debate about online applications and content.

"What we're seeing are winner takes all externalities - for example Google and eBay. Look what Google has done to Sensis," he said.

"Maybe we should insist on hyperlinks to alternative providers on pages of providers like Google.

"The same thing is happening with content where the big players with the most money are locking up content and keeping it away from other providers."