Telstra’s critics are showing no mercy and claim the telco’s pleas to the Senate against separation are scare-mongering tactics to stall for time.
Last week, Telstra came out swinging against the Government’s moves to structurally divide its wholesale and retail businesses using the proposed Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009. In a submission to the senate, the telco claimed the decision would harm consumers, particularly those in rural and remote Australia, and potentially destroy value for about 1.4 million Australia shareholders who purchased Telstra shares from the Government over the past 12 years.
But detractors refuse to accept its arguments and have called for the legislation to continue through the Senate without delay.
“It’s typical of the scare-mongering claims that Telstra puts out there and if you just scratch the surface, the claim has absolutely no substance whatsoever,” Optus general manager of regulatory affairs, Andrew Sheridan, said. “The market’s structure and current regulatory arrangements are shortchanging Australian businesses and consumers, and therefore there’s a very clear need to implement some reform.”
Competitive Carriers’ Coalition executive director, David Forman, agreed with Sheridan’s comments and labelled Telstra’s point of view stale.
“There is no veracity in its arguments against functional or structural separation. In fact, these are the same arguments they’ve been running for years,” Forman said.
In its 29-page submission, Telstra accused opponents of exaggeration and requested a raft of amendments as well as a delay on the legislation until it negotiated a separation agreement with the Government.
“In reality, the problems with the current regulatory regime are far more complex than the simple view that it is ‘all Telstra’s fault’,” it stated.
Telstra requested additional design elements to the functional separation principles, including “the principle that functional separation must not be unduly burdensome on Telstra, and the principle that Telstra is not required to physically separate information systems or networks”.
“Consideration of the Bill should be deferred until after the conclusion of constructive discussions between Telstra and the Government over the NBN [National Broadband Network] and the completion of the Government’s NBN Implementation Study.”
Communications minister, Senator Stephen Conroy, moved quickly to reject Telstra’s calls and fired a broadside at critics during a speech to the CommsDay summit last week.
“We remain absolutely committed to debating and passing this legislation before the end of this year. As I have said, there is no justification for delaying these fundamental reforms,” Conroy said. “They directly address the structural dysfunction of the communications sector, for the benefit of all Australians.
“Those keen to hold back these vital and historic reforms must explain how more delay would benefit consumers and our small businesses.”
Optus also remained cynical and accused Telstra of stalling to improve its chances of escaping structural separation.
“Telstra has been trying to slow down our migration to high-speed services over the last three to four years and it’s been doing that because it wants to use this as a lever to roll back regulation so that it can further entrench its monopoly position,” Sheridan claimed.
“The longer anything takes, the more it benefits because of its current dominant position. Telstra is probably also stalling for time because it knows that as we move into next year, things become a bit more politically sensitive.”
Ovum research director, David Kennedy, said the Government should be worried about the potential damage Telstra could do to the proposed NBN if it is split involuntarily. “I don’t think it should be taken as reflecting the state of discussions between Telstra and the Government at all,” he said.
“What [an involuntarily split of Telstra] would mean is instead of having an agreed timetable for the movement of traffic away from Telstra’s old copper and cable networks to the NBN, we’d have a competitive situation where the NBN would have to fight for every customer.
“It means it’s much slower to build up the NBN’s customer base, so it’ll be making losses for a longer period. Secondly, it means they’ll have to spend marketing money to get every customer and that will increase their losses.”