Gov't & ACCC "puzzled" & "perplexed" over Telstra's FTTN scrapping

Stuart Corner
Monday, 07 August 2006 19:54

IT Policy - Regulation

Government, opposition, competitors and regulators have all slammed Telstra's decision to abandon its discussion with the ACCC on the proposed FTTN network.

Communications minister Helen Coonan said she was disappointed by the decision and also admitted to being confused by the explanations given by Telstra's regulatory chief, Phil Burgess.

"Telstra has consistently said publicly that there were very few issues left to be resolved, so to pull out of talks when the issue was so close to resolution is very disappointing, particularly as the company cited the ACCC's unwillingness to recognise the actual costs incurred by Telstra with its FTTN investment as the key reason for the breakdown," Senator Coonan said.

"The ACCC is required by law to take into account the costs of the investment and legitimate commercial interests of the infrastructure owner, including the incentives and risks for efficient investment in infrastructure when determining the competitive access prices. The ACCC has assured the Government that it is has always been prepared to consider fair and reasonable access terms, as required by law. It is therefore puzzling that Telstra has identified this issue as 'the major stumbling block'."

She added: "It is important to note that Telstra's FTTN proposal was only ever intended for large sections of the five major capital cities of Sydney, Melbourne, Brisbane, Adelaide and Perth where there are already significant broadband speeds and ample competition. Telstra had no immediate plans for the network to extend to the remaining capital cities, large regional centres and rural areas in Australia. Therefore, Telstra's argument about the costs of providing a service to rural, regional and remote Australia is not relevant to FTTN."

In the briefing this morning, Burgess appeared to suggest that the talks failed not because of disagreement over FTTN costings but over the costs of other non-FTTN services beyond the proposed FTTN rollout.

He said: "We ran into trouble not on the principles related to funding high cost areas, but on the levels of funding required to deliver services to households and other premises outside the FTTN footprint, including people and communities in regional, rural and remote Australia as well as suburban areas outside the footprint.

"These differences centred on our view of costs and the ACCC's view of costs. This is a fundamental point: When you can't agree on costs, it is impossible to agree on prices and we are here today because our different view of cost led to irreconcilable differences on price."