Competition watchdog slams Telstra

Competition watchdog slams Telstra

Telstra CEO, Dr. Ziggy Switkowski, has described the Australian Competition and Consumer Commission (ACCC) Chairman, Professor Allan Fels, as being ‘out of touch’ with today’s telecommunications market.

In a speech on March 6, Professor Fels slammed Telstra, saying that the telco had demonstrated a willingness to use its market power to game the regulatory regime and delay competitive outcomes.

“Neither British Telecom nor any of the US telecommunications companies have the same level of integration, market dominance, and in the US case, national coverage, that Telstra does,” he said.

Professor Fels noted that Telstra controlled the local telephone network, was the largest mobile telephone carrier with the largest network, the largest retail ISP, and had a 50 per cent stake in the largest Pay TV provider (Foxtel).

In the local call market, Professor Fels said competition has had little impact - Telstra’s wholesale share of the market was 94.1 per cent.

Dr Switkowski was disturbed by the ACCC Chairman’s comments.

“The Chairman’s claim that competition is failing is incorrect," he said. "It ignores the fact that in the last 10 years the regulatory regime has delivered to consumers substantially lower prices, dramatically better service and much wider choice.”

“Australian consumers now have a choice of provider, and those who have chosen to stay with Telstra have done so because of our competitive prices, world leading technology, and improved service levels,” Dr Switkowski said.

Optus said it would not comment on issues directly affecting Telstra, but did say that what consumers did not realise was that Telstra’s competitors had to manage with no established infrastructure.

Telstra has had networks paid for by the Australian people, whereas other companies have had to start from scratch - or lease Telstra’s network - making competition very difficult.

Telecommunications analyst, Paul Budde, said there was no real competition in the market because the profit margins of resellers using the Telstra network were just so slim.

“Optus are not going to invest more money into their network because the future for competitors is in wireless and satellite technology,” he said.

Dr Switkowski said that regulatory access regime enforced by the ACCC was designed to specifically give competitors wholesale access to Telstra’s network rather than requiring them to build new infrastructure.

Budde said there was a lot of price competition in the Broadband industry, but there was no real value for resellers to compete with local and long distance telephone because Telstra was the only provider with a nationwide network, and they leased the infrastructure to resellers.

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