Forget the review says Telstra; we can handle rural comms

Stuart Corner
Wednesday, 15 October 2008 12:38

Opinion and Analysis

"The Australian Government has provided substantial subsidies to industry to expand terrestrial mobile phone coverage in towns and along highways in regional Australia... Around $145 million has been spent since 2001 on terrestrial mobile phone infrastructure, resulting in new or improved coverage to 560 towns and districts, 62 lengths along 34 regional highways, and near-continuous coverage along 10,000 kilometres of 16 national highways."

Booth has also ignored the committee's concerns, as a result of the feedback it gained from its hearings and submissions. The report notes that "Concerns about mobile coverage was the most frequently raised issue before the Committee...There is a serious mismatch between the impression given by industry of very extensive terrestrial mobile phone coverage and the reality of less than 15 percent coverage of the landmass for hand-held devices."

Booth also accused the committee of serious inconsistency in its recommendations. "On one hand they support an environment that promotes competition, innovation and investment in the bush, and then on the other make recommendations that will do nothing but create massive uncertainty for investment in regional Australia.

"For example, to suggest that the Australian Government should consider court ordered divestiture is totally inconsistent with investment. What company could justify investment to its Board if there was a risk of the courts ripping away your assets?"

The committee, however, makes it clear that its proposals "are based on the belief that competitive markets are best able to deliver telecommunications services," and that "Government interventions should be limited to where this is necessary to ensure service availability." It canvasses divestiture only as a last resort instrument by government against abuse of market power by a future NBN operator.

"It may be that the Australian Government will be satisfied by the access arrangements proposed by a proponent of the NBN without the need for structural separation. In that circumstance there would be no further change needed to industry structure. [However] the Committee would be concerned about the potential risk of such an outcome if the proponent was able to use market power to damage competition in a way unforeseen by the Government.

"The significant benefit of having legislated divestiture powers as provided in the US and UK is that it provides a guarantee or option to the public against such a circumstance. Therefore the Committee recommends that the Australian Government look into the merits of introducing legislative provisions that would provide for the forced divestiture of a business where this is in the public interest...

"The Committee has the view that were the Australian Government to award the NBN to an integrated operator then it needs to recognise the existence of the risk [of abuse of market power] and to legislate to enable separation as a remedy after the fact if the risk is ever realised.

"The Committee notes that such a legislative provision will act as a powerful incentive to reduce the likelihood of the risk being realised, but that the legislative provision is likely to have little or no other adverse impact on the market."

Booth has condemned this very cautious canvassing of divestiture as a last resort as a committee ''recommendation" without mentioning any of these qualifications.

The Federal Government is required to provide its response to the recommendations by 9 March 2009. If this initial salvo is any indication, the Telstra lobbying machine will be working overtime in the next few months.