Despite all the various submissions, arguments and discussions it looks as though the government will very much stick to its original telecoms plans:
Minimal structural changes to Telstra (on a voluntary basis only)
No investments in regional infrastructure (beyond some token handouts)
Watered-down version of the ACCC proposed price controls.
In July the Minister indicated that her preferred way of operational separation ‘can go well beyond the scope and impact of accounting separation without taking the heavy-handed and costly step of structural separation or forcing radical restructuring of Telstra’.
For the first time, however, she did provide some more details:
The new regime should provide wholesale customers of Telstra with greater certainty and clarity in relation to Telstra’s operations;
It should also give them confidence that they will receive treatment from Telstra Wholesale equivalent to that provided to Telstra’s own retail arms;
It should allow the regulator to more quickly and effectively scrutinise Telstra’s activity and compliance with its regulatory obligations; and
It should provide Telstra itself with greater regulatory certainty.
She rejected the British model as a valid option for Australia. However, importantly, she did highlight the fact that a company like BT can see commercial benefit in reaching an agreement of this nature with the regulator. In her own words she also confirmed that the underlaying issues that led to the British solution are also relevant to the Australian situation.
While I agree with her viewpoint here this will also need to be looked at from the position taken on the issue by Telstra’s new CEO, Sol Trujillo – ‘no separation whatsoever’. This doesn’t leave a lot of room for compromise, and even when a politically forced compromise is reached Telstra will not be too committed to actively pursue it.
This highlights the problem the industry has with the government’s approach – over the last ten years it has not received any evidence that Telstra can be trusted with this kind of voluntary (self-regulatory) arrangement.
The government also reiterated its previously announced policy to impose a licence condition on Telstra, requiring it to maintain a rural presence. In the absence of any details this could be a further threat to competition, and in the absence of any firm obligation regarding Telstra’s requirement to roll out true broadband infrastructure in regional areas a regional presence is pretty useless. The Minister also rejected the Nationals’ plan for a government-based infrastructure commitment for regional Australia.
As an example of the token handouts that we can expect in coming weeks the government announced an extra $50 million for the HiBIS fund, most of which will flow directly into Telstra coffers. The Minister indicated that the handouts will end up anywhere between $160 and $250 million – a far cry from the $5 billion needed to future-proof infrastructure in regional Australia.
I was in London when OFCOM made its decision on BT and reported on this along the following lines.
OFCOM decision boosts pro-competition camp in Australia
While in London I was involved in several very interesting discussions about this. The debate is very interesting. With nothing like a T3 hanging over their heads, the British financial analysts are rather disappointed that the structural separation did not go further. They believe that, in the long run, full separation is inevitable, and that this would lead to a completely new set of dynamics in the markets, around new merger and acquisitions.
In Australia the financial analysts are saying the opposite – a clear indication that their current analyses are based on greed, aimed at the lucrative privatisation fees. They know they’ll get another go at a fat Telstra in a few years’ time, when that company also faces a proper structural separation, at which point they will probably look forward to participating in the follow-up merger and acquisition feast – a perfect double-dipping opportunity for them.
It just shows how genuine all those current political and financial analyses are!
In general terms, everybody in the UK seems to be happy. I spoke to various players and they are all satisfied with the outcome. It will be followed up with proper legislation, which gives them confidence about transparency and enforcement. The fact that BT is happy with the outcome (a range of draconian regulations will be scrapped) means that there is a good chance that it will be quite cooperative in the process.
One organisation that was slightly disappointed was the British Consumer Association. They would have liked to see full structural separation as they don’t trust BT to offer better consumer services.
But even those who were critical welcomed the move, at least as a first step in the right direction. It was a rare experience in the telecoms industry to be present at an event where everybody was happy. OFCOM was delighted with all this praise and was very positive in its belief that this would lead to rapid changes in the competitive telecoms environment in Britain.
Already in London I knew that this outcome would have little influence on the Australian Liberal Party policies. To date they have ignored all advice on this issue from every independent source and are only interested in their grab for T3 money to finance their next political campaign. Without proper democratic checks in place, after July 1 they will close in for the kill.
However, I do believe that the British developments will be carefully studied by the National Party. The OFCOM report will provide the NP with excellent ammunition to further strengthen their case.
The call for similar separation in Australia has received another boost. Just before I left for Europe, the Regional Cities of Australia held a conference in Sydney, initiated and organised by Wagga Wagga Council, at which the impact of T3 on their local communities was discussed.
They are extremely alarmed about the lack of understanding from Canberra in respect of guaranteeing the future-proofing of the telecoms infrastructure, which is a Federal responsibility. They correctly concluded that they will probably be the most affected by T3 and they therefore will take a strong stand before Minister Coonan, urging her to make sure that their long-term telecoms infrastructure needs are secured. They have discussed a range of options that will be further fine-tuned in follow-up workgroup meetings. (The Regional Cities are looking from support from as many regional cities as possible and are seeking for signatures to their initiative – those who can assist pls let me know)
For everybody in Australia with a genuine commitment to the national interest of telecoms the OFCOM report is a real boost, at least to morale, and it demonstrates that we are on the right track in requesting the Australian Government to make a similar move. It certainly strengthens the case and will further fuel opposition against T3 in its current format. With the assistance of the National Party there is hope that Australians will fight to secure good telecoms (people power), based on future-proofing the network (FttH or equivalent outcomes).
Australia – Regulations – T3 reforms
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