Coalition broadband plan fails competition test

James Riley
Tuesday, 10 August 2010 16:03

IT Policy - Regulation

Tony Abbott's $6.3 billion broadband plan "falls at the first hurdle" because it did not address the structural reform of the industry and would stifle competition in the telecommunications sector, the Competitive Carriers Coalition has warned.

Any attempt at competition reform in telecommunications that did not include the structural separation of Telstra's wholesale and retail business was merely "tinkering at the edges" and was doomed to fail, a CCC spokesman told iTWire.

And Telstra's chief competitor Optus, while welcoming the Coalition commitment to backhaul investment, says the Opposition plan does not address the structural bottleneck created by Telstra's ownership of "last mile" connections to homes and businesses.

In a National Press Club debate on broadband policy today, shadow communications spokesman Tony Smith said the Coalition remained opposed to the forcible break-up of Telstra.

Instead, he said a Coalition government would give the ACCC broader powers as a means to improving competition and consumer outcomes in the sector.

Mr Smith said the Labor plan to break up Telstra was unfair to shareholders who had bought shares from Government during the privatisation process on the understanding that it was a "vertically integrated" service provider.

The Coalition today announced a $6.3 billion plan to improve broadband services in Australia through a mix of fibre, cable and wireless technologies. It includes investment and grant funding to build a nationwide fibre backbone that would operate as an open access wholesale network.

But the CCC says that without structural reform, the Coalition plan would merely perpetuate the competition problems that have plagued the industry for 25 years.

"The policy falls at the first hurdle because it doesn't address the need for structural reform," the CCC spokesman said.

"Without the structural reforms, any regulatory changes around price setting are really just tinkering around the edges" and would sink any chance of a truly competitive telecommunications sector, he said.