Telco self-regulation must benefit end users: ATUG

The Australian telecommunications industry must strike a balance between technology and competition while the government should ensure self-regulation works for the benefit of end users.

Pointing to the operational separation model introduced by Telstra last year as an example of steps being taken to strengthen the regulatory framework, Australian Telecommunications User Group (ATUG) managing director Rosemary Sinclair said it is now up to the government to show a willingness to work with industry for the long-term benefit of users. The operational separation, announced in September 2005, disjoins the wholesale and retail sides of Telstra in order to provide equal service to retail business units and wholesale customers.

Speaking at ATUG's annual conference yesterday, Sinclair said implementing effective operational separation is both the task of industry and Telstra in 2006, but the view of ATUG is that competition in practice is the only competition that counts.

"The ATUG view is operational separation will be difficult to administer and implement, but it is essential given the bottleneck nature of this infrastructure [copper network]," she said.

"Technology and competition is the balance we need to keep in mind in 2006. We need what new technologies like IP, 3G, wireless, and broadband can deliver, but not at the expense of competition."

Sinclair said the increasing availability of broadband, wireless and expanded mobile is working to create more effective competition than ever before.

"But not so effective that we can junk our regulatory framework or stand by and see it rendered ineffective in practice," she said.

On a wholesale basis, Telstra has been chastised by carriers over its Unconditioned Local loop (ULL) pricing. At a Service Providers Association (SPAN) lunch recently, Macquarie Telecom chief executive David Tudehope said current ULL pricing will cost the industry and consumers millions and is a step back towards the monopoly of the early 90s.

The Australian Competition and Consumer Commission (ACCC) is investigating ULL pricing structures.

ISP iiNet expects the final ACCC-approved ULL price to come in at $22 per month, but reckons it should be between $16 to $18, based on OECD and ACCC averages.

Telstra last month began charging $30 a month for ULL services; a Telstra spokesperson saying that fee only just met Telstra's costs.

Graeme Samuels, chairman of the Australian Competition and Consumer Commission (ACCC), said the watchdog has been reluctant to regulate end-to-end wholesale services, but is close to finalizing an initial view on whether wholesale basic access should be subject to regulation.

Samuels said there are two key aspects in the debate surrounding ULL pricing and both, so far, have been overloaded with rhetoric.

"The first issue is the impact of the average ULL pricing on line rental parity, and the ACCC is due to report to government by the end of this month. The second aspect is the level of ULL pricing," Samuels said.

"With respect to pricing structure, the view of the ACCC is that as a general principle, prices should reflect costs otherwise efficient investment and competition are less likely to materialize.

"The competitive process is beginning to bear fruit, we have seen emerging competition in broadband and mobiles but in spite of the positive signals the ACCC remains concerned that threats to emerging, and future competition, still exist. Our concerns mainly involve the copper local excess network."

Samuels said all the ACCC will say on the ULL pricing structure is that there could be different approaches for allocating specific costs, and while the ACCC has suggested ULL prices in metropolitan areas should be lower, "all ULL pricing matters are currently the subject of arbitrations before the commission and conducted confidentially".

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