[url]http://www.theaustralian.news.com.au/story/0,25197,22883048-5013584,00.html[/url]\n\n\nTelstra keeps rivals out of the loop\n\nDecember 07, 2007\n\nIT's hard to describe, even if you really wanted to, the dreadful mess\nin which Australia's billion a year telecommunications sector is mired.\n\nThe sector is increasingly critical to the economy and we don't need a\npaternalistic Telstra to tell us that. But the competitive landscape in\nAustralia's telecommunications sector is increasingly dire and provides\none of the big early challenges to Kevin Rudd's new Government.\n\nLet's mention quickly, and then put to one side, the elephant in the\ncorner. Last night Telstra chief Sol Trujillo told the financial market\nwhat was already clear - that the telco had no interest in a joint\nventure with the Government. It does not want a bean of its .7 billion\nif it means any type of joint venture or public private partnership. Nada.\n\nIt's a key issue for the future, but in some ways also a subsidiary\nissue to the central problem facing the industry as the neglect and poor\npolicy-making of the Howard government's 11 years play out.\n\nIt's been said often enough but it's worth repeating: for most of its\ntenure the Coalition had one policy for telecommunications - sell\nTelstra. In the dying years of the Howard Government, it became clear\nthat the competition blueprint developed by Paul Keating's government in\nabout 1995, and adopted more or less holus-bolus by Howard, was failing\nbadly. But enough history. Let's take a quick look at what's happening\nto the non-Telstra side of the sector.\n\nApart from Optus and the recently merged AAPT/Powertel, just about\neverything else is for sale, and not because they are making buckets of\nmoney at the top of the bull market.\n\nCommander Communications, with revenues of more than </body> billion, can't\nfind a buyer. Its chairman, Elizabeth Nosworthy, claims it's not a fire\nsale. Fire, for sure, as debts mount and losses continue, but no sale.\nNo one wants it. Soul Pattinson's SP Telemedia is on the block, Steve\nPicton has put a float of his GoTalk on hold as he canvasses the market\nfor buyers, and the stumbling Primus is a perennial sale item.\n\nIn mobiles, where there is better growth, either Vodafone or Hutchison\nwould happily do a deal, but the prices run into the billions - and who\nwants to run up against Telstra or Optus, which control 75 per cent of\nthe market between them?\n\nA the heart of the problem in the fixed-line sector, particularly the\ntortuous process involved in dealing with Telstra to try to get access\nto its monopoly network.\n\nThis involves months of negotiation and arbitration which is embedded in\nlegislation. Once the competition regulator "determines" a service, the\nparties - Telstra and a rival that wants network access - must\nnegotiate. When they can't reach a settlement, only then does the\nAustralian Competition and Consumer Commission have a role.\n\nIt is a fantasy to imagine that there is somehow or other an incentive\nfor Telstra to reach a negotiated outcome when it knows no one else can\nsupply the service.\n\nHow this plays out in the real world is that operators ask for the\nservice, but Telstra, knowing no one else can supply it, demands often\nridiculous prices or terms. Then after many months, sometimes years, of\n"negotiations", Telstra - quelle surprise - says no.\n\nOnly then can the ACCC step in. This is because when another telco goes\nto the ACCC it must have an explanation as to how it has "negotiated".\nDelay, obfuscation, dragging out - whatever you might what to call it.\nThen the arbitration process starts. Get the picture? Complex and close\nto never-ending.\n\nThe best example is the pricing to rent Telstra's raw copper wires,\nknown as the unbundled local loop, or ULL - the key element to broadband\ncompetition today, using ADSL technology.\n\nThere is still no final price set despite the service being "declared"\nin 1999. That's right - eight years on.\n\nIt's all legal, it's all in system. In fact it is the system, and it's a\nbig, big problem and one that's slowly sending the rest of the industry\nbroke.\n\nClearly, this was not the intention of deregulating the sector, but it's\nwhat is happening. At the end of the day the ACCC will eventually\nproduce a list of access prices, so why go through this process? Let the\numpire decide and Telstra can test the decision in court. Cut out the\nmiddlemen, cut out the lawyers. Speed it all up.\n\nEvery day a decision is delayed maintains the status quo and holds back\nnew investment because of lack of certainty. It's a case of who has\ndeepest pockets wins. It suits Telstra just fine.\n\nFrankly, it's an embarrassment when most other developed nations have\nsimply set prices and moved on. The purpose of the act is to allow, nay\ndirect, the ACCC to "expeditiously" resolve disputes. Fat chance. At\npresent there are over 50 arbitrations in train with the commission -\nall with Telstra.\n\nStephen Conroy has plenty to do, apart from throwing .7 billion at a\nbetter broadband network.