Turnbull plan to entrench Telstra dominance

James Riley
Wednesday, 27 October 2010 18:11

IT Policy - Regulation

The Coalition wants amendments to proposed telecommunications industry reforms that allow for a Telstra separation into wholesale and retail businesses - but under a deal that guarantees wholesale pricing and regulatory certainty for the company.

Shadow communications spokesman Malcolm Turnbull says the so-called "gun to the head" provisions of the reform bill should be removed, and that the separated Telstra business should be able to operate as a wholesaler

He says the Competition and Consumer Act (formerly the Trade Practices Act) should be applied to the proposed deal between the NBN Company and Telstra - an amendment that would effectively sink the Government's National Broadband Network project as currently planned.

Mr Turnbull said the Coalition was committed to the delivery of fast-broadband, but only if it is "delivered in a manner that is cost-effective, promotes competition and imposes no greater cost on taxpayers than is absolutely necessary."

He says the proposed $11 billion NBN Co-Telstra deal and the creation of a Government-owned wholesale-only monopoly was too expensive and carried too much risk for taxpayers.

The proposed amendments remove the foundations of Government's National Broadband Network plan and would effectively scuttle its roll-out in its current form.

Instead of an open-access monopoly company providing high-speed broadband services to retailers, the Coalition would seek to have wholesale market managed by the ACCC, which would set a pricing regime that delivered a reasonable tae of return on assets.

"The Coalition therefore has no objection to Telstra separating its retail and network businesses, but does not believe such a separation should occur under duress, or via a deal that is in breach of the nation's competition laws," Mr Turnbull said in a statement.

"Any such restructure should be on terms which are fair to Telstra shareholders.
A separation could occur on terms attractive to Telstra shareholders if the separated network company were given regulatory certainty and the knowledge that as a regulated utility it would be able to charge prices delivering a reasonable rate of return on its assets," he said.

Mr Turnbull said the pricing regime is the same as that which applies to other utilities such as gas, electricity and water. He does not say how the Coalition would encourage Telstra to voluntarily separate its businesses if the Government's punitive measures are removed from the reforms.

"The NBN scheme of the Government does achieve structural separation, but at enormous and unnecessary cost and risk to the taxpayer, and via the establishment of a new Government-owned fixed line monopoly with which there will be no competition," Mr Turnbull said.