Telstra shoots messenger: accuses economists of producing 'bogus report'

Stuart Corner
Friday, 06 June 2008 06:55

Opinion and Analysis

If the ferocity of Telstra's attack on the latest contribution from the Competitive Carriers' Coalition to the current debate around the national broadband network is any indication, the CCC has hit the nail on the head. And what's more, Telstra's attempt to destroy its credibility has played right into the CCC's hands: ensuring that its views gain wide exposure.

At a seminar in Canberra on Thursday 5 June organised by the, overlapping, carrier grouping behind the Tell The Truth Telstra (T4) web site, the CCC presented a report by the Centre for International Economics. The report claimed to have determined that "Australian consumers will pay 15 percent more for broadband services if Telstra wins the rights to build and manage a National Broadband Network."

Furthermore, it concluded that:
 - Australian consumers and the economy would be $897 million worse off under a Telstra owned and operated National Broadband Network;
- Telstra's targeted return on its capital investment was relatively high and "may be consistent with the abuse of market or monopoly power";
- The build-cost scenarios for Telstra's broadband network would increase inflation, reduce national growth, lower wages and reduce national consumption;
- The impact of Telstra's network would "lead to a general contraction of the Australian economy."

Strong stuff! And Telstra's response was immediate and ferocious. It did not attempt to counter the report's finding in any detail, simply dismissing the report as 'bogus' and accusing it competitors of having "sunk to new lows in their bid to stop Australia getting a high-speed broadband network."

Group managing director for Telstra Wholesale, Kate McKenzie said: "This is a completely bogus report that has been bought and paid for by a bunch of competitors who want one thing only - to stop the building of Australia's national broadband network and keep their current cosy arrangements. "The report has no basis in fact. It is a dishonest distortion that is designed to do nothing but delay the process."

When you want to discredit a report you an always find a few words to quote selectively in support of your cause. Thus we have McKenzie claiming "The report itself says: 'estimates presented in this report may not be precise' and that the 'estimation error in the WACC calculations presented in this report may be significant'."
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