Macquarie Telecom Calls for Better Regulation to Curb Telstra's Efforts to Re-entrench its Monopoly

SPAN Forum to Deplore Telstra's ULL Pricing & Operational Separation
 

Sydney, Australia – 16 February 2006 - Chief Executive of Macquarie Telecom, David Tudehope, will today call on the Government to adopt “better regulation” rather than “more regulation” in the telecommunications sector to curb Telstra's drive to re-entrench its monopoly.

Mr Tudehope is the keynote speaker at today's Service Providers Association (SPAN) Director's Lunch on the topic of “Is the telecommunications industry over regulated?”

In a prelude to his speech, Mr. Tudehope said, “The ultimate test of regulation is if it achieves the desired outcome. That is, effective competition and better outcomes for users. Australia is failing on both counts.”

Telstra's ULL and Operational Separation Undermine Competition in CBD/Metro Where, for the first time, Telstra Now Faces Competition

He warned Telstra's most recent anti-competitive initiatives surrounding Unconditioned Local Loop (ULL) pricing and operational separation would cost the industry and consumers millions and were a step back towards the monopoly of the early nineties.

“There are currently far too many opportunities for Telstra to ‘frustrate' competition as a gatekeeper and aggressive litigator. The most recent example is Telstra's decision to go over the head of the ACCC and determine its own pricing structure for competitors to access its copper phone network, or ULL,” said Mr. Tudehope.

“Analysts have determined that the move to a $30 flat-rate amounts to an increase of more than 230 per cent for CBD ULL pricing and 36 per cent for metropolitan ULL. Therefore, the $30 ULL push is nothing more than an attempt to undermine competition where its starting to bite: in the CBD and inner metro areas with alternative Customer Access Networks like the Macquarie access network,” continued Mr. Tudehope.

Administrative Regulation Too High & a Drain on Public Funds

Commenting on the wide range of Austrlaian policy and regulation (administrative, self regulation and structural regulation – see full presentation), Mr Tudehope said “The general consensus is that the level of administrative regulation in the industry is too high.”

Telstra claims the total hours it spent on administrative report writing alone for this financial year is 89,569 hours. It equates these hours to an annualised total of approximately 42 years of work for one person.

This reporting isn't just directed at Telstra - it applies to most of the industry.

“One could argue that scarce public resources are better used focusing on the areas of the industry that are not functioning effectively, rather than red tape administration that is a legacy of the early days of regulation, ” said Mr. Tudehope.

Structural Regulation – The Biggest Priority for Reform

Mr Tudehope said that reform of the regulations pertaining to industry structure is the biggest issue facing the Government in the next 12 months as it determines the success or failure of new market entrants and the introduction of innovative services for Australians.

“Better outcomes are not a function of having more regulation. Rather we need to get the regulatory framework right so it functions effectively – this in turn will lead to greater investment, better prices and enhance Australia's ability to compete in global markets,” he said.

Mr. Tudehope stated that the separation of Telstra's wholesale and retail businesses is one way to mitigate anti-competitive behavior.

“By establishing genuine arm's length trading arrangements, Telstra will be required to deal with all providers equally. This will bring Australia one step closer to a level playing field and ensure choice for end-users,” he said.

“We cannot underestimate Telstra's ability to stifle competition – the company has enormous structural, financial and political clout.”

Mr. Tudehope called for a range of reforms including:

• Increase ACCC resources, expertise and funding
• “Ring fencing” or “arms-length dealing” rules between Telstra Wholesale & Telstra Retail – similar to those adopted in the Energy sector
• A “de-merger” or divestiture power to complement existing ACCC powers on “mergers & acquisitions” i.e. if a corporation "abuses market power”, ACCC has power to order divestiture
• TPA reforms. E.g. Toughen ‘Part XIB anti-competitive provisions' & enable ACCC to ‘set' terms & conditions rather than wait for Telstra to submit an “undertaking”
• Change USO ‘modus operandi'
• Price Caps – exclude competitive areas (i.e. ‘business services'

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For more information:
Mandy Galmes
N2N Communications
02 9213 2302
agalmes@n2n.com.au

About Macquarie Telecom
Macquarie Telecom is a leading supplier of Information and Communications Technology (ICT) solutions – including voice, data, mobile and hosting – specialising in the business and government markets. The world class Intellicentre facility offers state-of-the-art hosting and security solutions. The Intellicentre is certified to BS 7799 and DSD Gateway security standards.

Macquarie Telecom provides services to more than 2,500 of the top companies in Australia and Asia, supporting more than one million business users at work every day. Founded in July 1992, it is one of Australasia's first deregulated telecommunications companies. It expanded its operation into Asia in 2000, and holds carrier licences in Australia, Singapore and Hong Kong.