Telstra plan a black day for competition

Stuart Corner
Tuesday, 15 November 2005 15:12

IT Policy - Regulation

Telstra's wholesale customers have been quick to condemn the company's newly announced business strategy as signalling a return to the era of monopoly.

Telstra has made no secret in recent months that it is pulling back from viewing wholesale as a key component of its business, but today's strategic review has provoked renewed outcry from tier 2 carriers.

David Forman, executive director of the Competitive Carriers Coalition (CCC) said: "Telstra has today issued a declaration of war on competition policy and regulation in telecommunications in an attempt to turn back the clock on the past decade of reforms."

Referring to recent sudden removal of key Telstra Wholesale staff to other positions in Telstra, Forman said: "Telstra has already thumbed its nose at the Government's new operational separation policy by gutting its wholesale business before the policy is even implemented...It has become clear that Telstra will engage on a concerted campaign to reverse everything that the Government and the ACCC has done over the past decade, by driving up prices for competitors to access its monopoly network.

"Consumers in Telstra's perfect world will have a simple choice – buy every communications service from Telstra, or be forced to pay up to twice as much for basic services," Forman said.

"Two things are very clear from Telstra's presentation today. Firstly, thanks to a benign regulatory environment, it has succeeded in holding back competition for years longer than its counterparts in the rest of the world, and Australian consumers have suffered for it.

"Secondly, competition policy is finally starting to bite, and Telstra will spend what ever it takes to turn back the clock."

Matt Healy, national regulatory manager of CCC member, Macquarie Telecom, said that Telstra was still enjoying margins of 50 percent despite falling global telco revenues. "Telstra has been protected from competition and revenue decline in a way no other integrated telco in the world has had the pleasure of...This money is coming straight out of the pockets of Australian people and Telstra's competitors."

He noted that, on the one hand, Telstra is claiming it will achieve cost reductions expected from its new 'integrated factory model' but still "has the audacity to say it needs to increase the price of core services it is required to deliver its competitors."