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

Stuart Corner
Friday, 06 June 2008 06:55

Opinion and Analysis

Of course, she did not quote the following sentence which read: "However, obtaining precision is not the main objective of this analysis. The main point is to show that it is likely that a significant margin exists between Telstra's required return from the FTTN network and the return that an alternative supplier would require for the same asset, and this margin will translate into hardship for the economy and the community."

Over two decades or reporting on  telecommunications I have seen more reports produced by economic consultancies crunching numbers in support of one or other side of a telecoms argument than I've had hot dinners. It is well beyond by competence to determine the merits of their arguments, but I have come to the conclusion that it is possible to arrive at whatever conclusion you want by choosing the right model and making the right assumptions.

A decade ago both Telstra and the Government used the same consultancy, The LEK Partnership, to arrive at totally different estimates for the cost of meeting the universal service obligation ($250m v $800m)!

The CIE bills itself "a highly respected private economic consultancy providing advice and analysis to Australian and foreign governments, international organisations, and the private sector." It has been in business for 20 years and claims to have "built a reputation for analysing difficult and complex economic issues, and producing well researched, comprehensive and credible economic assessments.

Clearly it has a reputation to protect and for Telstra to dismiss its latest body of word as "a bogus report with no basis is fact and a dishonest distortion" is a slander on the organisation and those who work for it. It is shooting the messenger rather than the message. It's up to Telstra to keep the economists employed and commission its own report to counter its competitor's arguments I'm sure that won't be too difficult.