073/06
7 August 2006

Government disappointed Telstra pulls out of network talks

The Government is disappointed by Telstra’s announcement today that it has pulled out of discussions with the Australian Competition and Consumer Commission (ACCC) about regulatory arrangements for a fibre-to-the-node (FTTN) network for selected metropolitan areas of Australia, the Minister for Communications, Information Technology and the Arts, Senator Helen Coonan, said today.

“Telstra has consistently said publicly that there were very few issues left to be resolved, so to pull out of talks when the issue was so close to resolution is very disappointing, particularly as the company cited the ACCC’s unwillingness to recognise the actual costs incurred by Telstra with its FTTN investment as the key reason for the breakdown,” Senator Coonan said.

“The ACCC is required by law to take into account the costs of the investment and legitimate commercial interests of the infrastructure owner, including the incentives and risks for efficient investment in infrastructure when determining the competitive access prices.

“The ACCC has assured the Government that it is has always been prepared to consider fair and reasonable access terms, as required by law. It is therefore puzzling that Telstra has identified this issue as ‘the major stumbling block’.

“The Government also reviewed telecommunications regulatory arrangements last year and specifically made changes to further encourage investment and ensure investors’ risks were taken into account in regulatory considerations and decision-making.

“There have been no substantive changes to the market since the 2005 review and Telstra remains in a strong market position in many markets.

“However, at the end of the day this is a commercial decision for Telstra and the competitive market place in Australia will continue to provide improving access to new services.

“The Government’s telecommunications regulatory framework has brought significant benefits to Australians who now enjoy more choice and lower prices.

“The facts show that Australians are now taking up broadband at a rapid rate, with Australia the fifth fastest growing broadband market in the OECD. We are now fast approaching 4 million broadband subscriptions in Australia.

“And service providers are already offering multi-megabit broadband speeds via alternative platforms including ADSL 2+, cable and wireless. At least nine service providers already offer ADSL 2+ in the capital cities and major regional centres at very fast speeds and I encourage Telstra to switch its ADSL2+ network on as well.

“It is important to note that Telstra’s FTTN proposal was only ever intended for large sections of the five major capital cities of Sydney, Melbourne, Brisbane, Adelaide and Perth where there are already significant broadband speeds and ample competition.

“Telstra had no immediate plans for the network to extend to the remaining capital cities, large regional centres and rural areas in Australia. Therefore, Telstra’s argument about the costs of providing a service to rural, regional and remote Australia is not relevant to FTTN.

“The Government will continue to regulate in the national interest and ensure a healthy competitive environment in the telecommunications sector that will continue to drive down prices for Australian consumers and offer innovative new services.

“This is complemented by the $1.1 billion Connect Australia package and $2 billion Communications Fund which will ensure people living in rural, regional and remote Australia can access world class telecommunications services both now and into the future.”