Regulation was no bar to investment by Telstra in telecommunications infrastructure, an ACCC Commissioner, Mr Ed Willett, said today.*
"…the problem remains that, due to its monopoly over the local access network, Telstra can choose when it will respond to a competitive challenge", Mr Willett said. "It appears that when competitors indicate plans to rollout certain infrastructure, for example DSLAMS that would provide higher speed broadband services, Telstra makes its own competitive response.
"That's all part of the benefits of competition. If access regulation makes it possible for competitors to invest in infrastructure, while also encouraging (or at least not deterring) Telstra, then that is a good outcome. In a competitive environment, any investment shortfall by Telstra is likely to be offset by increased investment by Telstra's competitors".
Mr Willett said the Government's proposed model for operational separation of Telstra maintained the balanced approach of the existing regulatory regime while recognising that Telstra is in a unique position through its local access network monopoly of being able to stifle innovation by frustrating its competitors' investment plans.
"For this reason, the ACCC welcomes changes which should increase transparency and equivalence in the way Telstra provides key access services to its own downstream operations relative to those of its competitors. Most importantly, these changes should complement the checks and balances of the well-established and thoroughly reviewed regulatory regime.
"And despite the scepticism of some commentators, the Government's program is not designed to undermine Telstra's value, but rather to ensure that its fixed network monopoly (which Telstra itself concedes should still be subject to regulation) is operating in a transparent way. Telstra should have nothing to fear from this, as such transparency should provide it with a much more certain starting point for verifying that Telstra is competing on a fair basis.
"Indeed, the equivalence obligations reflect the principle that a more level playing field enhances the efficiency of the telecommunications industry, and shouldn't affect an efficient Telstra's ability to invest, compete or prosper. Telstra's prospects lie in its own hands.
"If the final operational separation model reflects the Government's intentions for increased transparency and equivalence, Telstra's competitors will be in a better position to see the terms and conditions for network access that Telstra offers to its own retail units and compare these to the terms and conditions they themselves face.
This will improve transparency and certainty for Telstra's competitors, and is likely to be conducive to more investment in telecommunications services overall.
"The only thing that Telstra should fear is the threat of competition. The quality of its responses to emerging competition will, alone, determine Telstra's prospects and value to shareholders".