Unshackle us from Telstra, says Optus

Unshackle us from Telstra, says Optus

Summary: Optus chief executive Paul O'Sullivan has joined the current debate over Telstra's obligation to maintain rural telephone services, claiming telecommunications companies should be freed from funding the soon-to-be privatised telco.O'Sullivan said the Universal Service Obligation (USO), which requires carriers to subsidise Telstra's maintenance of regional and rural phone services, should be reformed.

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Optus chief executive Paul O'Sullivan has joined the current debate over Telstra's obligation to maintain rural telephone services, claiming telecommunications companies should be freed from funding the soon-to-be privatised telco.

O'Sullivan said the Universal Service Obligation (USO), which requires carriers to subsidise Telstra's maintenance of regional and rural phone services, should be reformed.

"Current USO arrangements should be reformed so that Telstra's competitors be released from the requirement to pay a cash cross subsidy to Telstra.

"Instead, carriers would negotiate directly with [the] government on how their USO equivalent contribution would be used to improve competitive and innovative infrastructure investment in rural and regional Australia," O'Sullivan said in a statement.

Debate on the issue was recently ignited by Telstra regulatory managing director Kate McKenzie, who told an industry conference the USO was "not sustainable" in the longer term. Telstra claims a lack of funding for the USO is "holding back" profitability, and is a regulatory burden.

The Minister for Communications, Information Technology and the Arts, Senator Helen Coonan, has said the USO will remain "regardless of who owns Telstra".

Despite this, O'Sullivan said a fund to support such phone services should be designed to encourage carriers to enter the regional market.

"The principles for the effective distribution of monies should be that they are competitively and technologically neutral, competitively tendered and that they do not reinforce Telstra's dominance in the bush," he said.

Regulatory action was still necessary to stop Telstra unfairly leveraging its market dominance and widespread fixed-line network, O'Sullivan added.

"It is uneconomic for competitors to duplicate large parts of Telstra's fixed line network. So to unleash the power of competition, our government -- like the governments of other countries -- require the incumbent telephone company to sell its network services to competitors.

"This leads us to operational separation which we see as a necessary reform. At a minimum, Telstra should be restructured so that the access network, and core services delivered over that network, are managed by an Access Division. This would ensure negotiations between the Access Division and Telstra Retail are conducted on a genuine arms length basis and that pricing is transparent," the Optus executive said.

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

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  • Telstra and the bush

    Unfortunately, the deregulation of Telecommunictions in Australia still left Telstra with a head start of the 20th century over its competitors by virtue of the fact that it owns the infrastructure which allows access into the bush and, further to that, it has also since acquired other infrastructure such as that of the ill-fated IP1. Further, the copper network which was also seen as a legacy network was given a new lease of life with *DSL services. Hopefully, this topic will be further addressed into Government enquiries into Telecommunications Australia prior to the sale of Telstra. Surely a Government so driven by a competition at all costs policy cannot let the present anti-competitive situation persist.
    anonymous
  • Why does nobody suggest the obvious solution?

    All this discussion of separating Telstra into infrastructure and retail services divisions is pointless since a gross conflict of interest will still exist. Both divisions will ultimately report to the same boss - regardless of any legislative or operational "arms length" separation - who is only interested in profits and shareholder satisfaction.

    A fully privatised Telstra will have no interest in the economic black hole of bush telecommunications services. The only fair solution is for the Federal Government to maintain control of all existing infrastructure and sell off the remains of Telstra as a retail only enterprise. At least that way the government can hopefully fulfill it's role of providing much needed services to everybody while the telcos have genuine retail competition on a level playing field.
    anonymous
  • Telstra sale

    In australia we have a good road system, paid for by the government(tax payers) and maintained with charging users via petrol taxes and vehicle registration. The same principle can be applied to the communication "roads" such as fibre optic cabeling Australian wide.
    ozzie_robert