Conroy must stand firm in NBN negotiations with Telstra

Stuart Corner
Friday, 27 November 2009 05:53

Opinion and Analysis

Failure of the telecoms reform bill to get through Parliament has given Telstra a window of opportunity to wring from the Government more favourable terms in return for its involvement in the NBN.

The Telecoms reform legislation that the Government tried very hard to get through the Senate this week would have given it a number of 'sticks' with which to beat Telstra: government enforced functional separation, limitations on broadband wireless spectrum acquisition and forced divestiture of HFC and Foxtel.

With these swords hanging over its head Telstra has been negotiating with the Government its involvement in the NBN which could see some Telstra network assets transferred to the NBN and Telstra becoming a customer of the NBN to serve its existing customers.

Had the legislation got up the parameters within which these negotiations could have been conducted would have been much more limited than they are now. Barring a double dissolution, there is little doubt that the legislation will get up when Parliament resumes in February, but the two month hiatus has given Telstra the opportunity to negotiate more favourable terms.

However, even in the worst case scenario - a double dissolution - it has not left the government without one very powerful weapon in its armoury: it does not need Parliament's approval to enable it to block Telstra from future spectrum.

Limitations on who can acquire what spectrum have been put in place in previous auctions to foster competition and the word is that the Government would not hesitate to do the same thing again. (However any suggestions that Telstra can use this "window" to snap up desirable spectrum are a complete furphy - the ACMA is many months away from even drawing up the ground rules for future auctions of the sought after spectrum.)

For Telstra's competitors the most worrying aspect of the delay is that it could enable Telstra to "negotiate away" the proposed oversight by the ACCC of any separation undertakings given by Telstra as the result of a negotiated deal.

As the recently published digest of the Bill notes "Under the Bill, the ACCC has a formal role in assessing undertakings which it would not necessarily have in a privately negotiated agreement; there is a greater degree of transparency in the case of undertakings under the Bill than there would be if the agreement were reached outside of the Bill and the enforcement remedies for breaches of undertakings made under the Bill are stronger than for a commercially negotiated agreement."

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