Should Telstra eat humble pie?

Summary:What would you do if you were Telstra? Switch on ADSL2+ or complain to the government?

commentary The plainly spoken chairman of the Australian Competition and Consumer Commission sent Telstra a black and white message last week.

Renai LeMay, ZDNet Australia
If the telco was just prepared to ask for it, Graeme Samuel told a Sydney conference, he would drop a letter in the post containing certainty that competitors would not gain access to Telstra's ADSL2+ broadband network as it was enabled. "You can't get much more certainty than that," Samuel said.

You can watch Samuel's speech online here.

At first listening, Samuel's speech was extremely convincing. All Telstra needed to do, he suggested, was eat a little humble pie and apply for a regulatory exemption like everyone else.

It's also a message the ACCC supremo has delivered before -- back in October he said the regulator then saw no compelling case to regulate a wholesale DSL service.

It's likely that Telstra saw some sense in Samuel's comments at that point. Soon after, the telco uncapped the speeds of its ADSL1 service and switched on ADSL2+ services in areas where competitors were already providing the higher-speed service.

But this time the ACCC boss's argument didn't impress the telco.

"That process would take about two years," Telstra's spokesperson Rod Bruem told your writer this morning, referring to Samuel's invitation to Telstra. "And even if we were to do it, the ACCC still has the power to vary the terms and conditions of any exemptions as it pleases," he added.

Bruem pointed out that Telstra had tried Samuel's advice before -- when it applied for an exemption relating to the digitisation of its Foxtel pay TV joint venture. "That was eventually rejected, on the basis that Telstra had already started making the investment," he said. "The same would apply here. In a lot of cases the ADSL2+ is sitting in the exchanges and not turned on."

"There needs to be a change in the law that stops the ACCC handing over investments like that to our competitors at below cost," Bruem said. "Because here we have Graeme Samuel saying he wouldn't do it."

"But under the law, if someone came to him and applied, he would have to go through the process of considering that, and history shows what the outcome would be. I mean that is the law, he would have to follow the law as it stands."

Now Bruem has a point -- the ACCC does have to consider pleas put before it by rivals. And if the telco has been burnt once with regulatory exemptions, it might make sense to try to level the playing field through a legislative amendment, rather than obeying the current rules.

However, it's also true that there are now a substantial number of telcos rolling out their own ADSL2+ infrastructure. Optus, iiNet, Internode, Adam Internet, Soul, Amcom and PowerTel -- to name a few.

From the ACCC's viewpoint, if Telstra upgraded the rest of its network to ADSL2+, there would be nothing to stop those telcos putting in their own infrastructure and simply competing. Particularly those like SingTel subsidiary Optus, which have parents with deep pockets. This would avoid the need to force Telstra to offer a wholesale ADSL2+ service.

Your writer doesn't think it's likely that Telstra will in the near future switch on ADSL2+ in the rest of its network. But the telco probably should -- the move would generate immense public good will, give it an immediate advantage over competitors, and force those same rivals to be the ones crawling to the ACCC.

What would you do if you were Telstra? Write a humble letter to the ACCC, switch on ADSL2+, or just complain bitterly to the government? Drop me a line directly at renai.lemay@zdnet.com.au or post your comments below this article.

Topics: Broadband, Government, Government : AU, NBN, Optus, Telcos, Telstra

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