Competition in telecommunications in Australia has been seriously hampered by poor industry structure resulting from Telstra's dominance of communications infrastructure, ACCC Commissioner, Mr Ed Willett, said today*.
"Without some form of structural separation of Telstra, this outlook is unlikely to change soon.
"But in the longer term, emerging networks and technologies could have a significant impact on competition in telecommunications markets, provided existing and future regulation is well designed and applied and the competitive potential of new technologies are captured by capital investment by Telstra's competitors.
"Technological developments offer the prospect of serious challenges to Telstra's dominance and opportunities for Telstra's competitors:
- first, by lowering the costs of existing infrastructure, such as telephone exchange switchgear, which improves the economic viability of competitive infrastructure and
- second, technology is improving the viability of new communications modes, such as fixed wireless and satellite.
"But while technology may be the saviour of competition we must ensure this serious challenge to Telstra's current market power is not strangled at birth", he said.
"These emerging markets, networks and technologies will only survive if they are supported by effective regulation designed to promote sustainable competition in which competitors are less reliant on Telstra infrastructure.
"So, the role of regulation and the ACCC must be, in the short term at least, to ensure operators are not unduly prevented from developing a customer base, while at the same time, and with the longer term in mind, to design and apply regulatory solutions that best promote competitive infrastructure.
"That is why the Commission is focussed at present on promoting and protecting opportunities and incentives for the development of competitive infrastructure and services, including the deployment of new technologies on existing and refurbished networks. This is particularly pertinent given the increasing momentum in investment in the industry after several years of very sluggish growth.
"New entrants need a reasonable opportunity to build new access networks, or to use existing networks to provide new services and technologies. This should be able to occur without the added burden of having to combat anti-competitive behaviour".
Mr Willett also issued an update of the ACCC's Snapshot of broadband deployment today. Competition in broadband services provide one of the keys to competitive infrastructure in the future because its high value provides the potential to underwrite large investments.
The report shows that as at the end of March 2004, there were 829,300 broadband services connected across Australia, an increase of 130,600 since December 2003.
"This is the largest quarterly increase since the ACCC began collecting broadband statistics in 2001", Mr Willett said.
Growth in broadband services increased to 18.7 per cent for the March 2004 quarter, reversing the downward trend in growth rates seen over the last three quarters of 2003.
"The take-up figures clearly demonstrate the dynamic nature of this emerging market. However these statistics should not necessarily be taken as an indication that foreclosure of competition in the broadband market is not being attempted or achieved".
Current and previous ACCC Broadband Snapshot reports will be available on the ACCC website.
*A full copy of Mr Willett's speech to the Australian Telecommunications Summit in Sydney will also be available.