The competition watchdog has thrown its weight behind the functional separation of Telstra which will undo “mistakes” in relation to telco's vertical integration.
The federal government has said it will consider splitting the telco into separate retail and wholesale arms, under the same legal ownership, during the roll out of the $43 billion National Broadband Network.
Speaking at a Canberra conference yesterday, Australian Competition and Consumer Commission (ACCC) chairman Graham Samuel said current access regimes of “negotiate/arbitrate” imposed on Telstra may not work for the NBN.
“The NBN raises the opportunity to undo the mistakes made by previous governments that decided to leave Telstra in control of both the copper network and its retail operations... these decisions have been fundamental errors,” Samuel said
“[There are] a number of options to change the industry structure and reform the regulatory regime in order to improve competition in the transition period before the NBN is operational.
“Functional separation may go some way to addressing concerns regarding the promotion of equivalence in the treatment of access seekers. However, vertical integration of any form into downstream markets, even when subject to functional separation, will not necessarily ensure equivalence,” he said.
The ACCC reported 157 telecommunications access disputes since 1997, compared to three flagged in other sectors, and 15 unconditioned local loop (ULL) and line sharing service (LLL) determinations before the federal court this month.
In deciding the lay of the network, Samuel suggested broadband minister, Stephen Conroy, should take a lesson from the French and consider allowing telcos to string fibre directly from houses in a point-to-point network at their own expense. The competing, but incompatible point-to-multipoint technology model would see houses connected through a serial fibre loop.
Either way, he said the decision will need to be made before this year's roll out of the Tasmanian NBN, to avoid reducing competition.