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Aus Govt should stop favouring Telstra: Vodafone

Australian Government funding for new projects and regulatory favour for Telstra are hampering attempts to create a level playing field in telecommunications, according to Vodafone.
Written by Josh Taylor, Contributor

Although the government had taken great strides in making the industry a level playing field with the roll out of the National Broadband Network (NBN), Vodafone's General Manager of Public Policy Matthew Lobb said that Telstra was still getting preferential treatment from the government.

Speaking at an industry panel at the Australian Communications Consumer Action Network (ACCAN) 2012 conference in Sydney this morning, Lobb said that, despite the structural separation of Telstra's wholesale and retail fixed line businesses, the incumbent operator was still too big.

"Telstra is still the dominant player in, we think, an unhealthy way, across all the facets of our industry," he said. "Telstra is an unprecedently integrated telco. It dominates in fixed voice, fixed broadband, mobile, HFC and 50 percent owner of pay TV. That's a portfolio that is unprecedented."

"They still retain a lion's share on fixed-voice profit, a more than 50 percent share of the fixed broadband profit, and the same when it comes to mobiles."

He said that Vodafone was prepared to compete with Telstra, but said that the industry needed to be "vigilant" about the protections Telstra gets in regulations and government decisions. Lobb highlighted the Western Australian Government's decision in January to pay Telstra AU$39.2 million to upgrade its network in regional WA.

"It certainly improved coverage, but it actually delivered an improvement to the most profitable telco in Australia's market position. And we've got to be vigilant about those kinds of policies, to promote competition and not just increase coverage."

iiNet's Chief Regulatory Officer Steve Dalby said that the focus should be on ensuring that whatever regulation is in place doesn't get "gamed" by telecommunications companies.

"One of the biggest concerns I have is that, whatever regulatory regime is in place, some players will go out of their way to game that regime," he said. "It has nothing to do with delivering services to customers ... it's just purely wasteful of a lot of people's time to fight this sort of gaming. A focus on removing the opportunities for gaming would be very high on my priorities."

Optus' Vice President of Regulatory Affairs David Epstein said that the gaming in the telecommunications industry was one of the reasons he left it in the first place. He said it was different now.

"The refreshing thing about coming back in the current environment is that we do have the opportunity to move beyond that," he said, "driven by a cultural change, where regulation for fixed services is stronger now on Telstra and rivals don't act as victims of Telstra."

Telstra's Managing Director of Corporate Affairs Dr Tony Warren said that no one wanted a re-run of the "gaming regulation era", and said that this needed to be resolved in NBN Co's long-awaited special access undertaking (SAU) document, which will set out how the company operates over the next 30 years.

"I think there's a real risk at the moment with the NBN SAU that, because it is looking like it is largely like a principles document ... I have a feeling we're going to be running back to the [Australian Competition and Consumer Commission for guidance]."

He said the SAU should have a standard contract for retailer internet providers that are seeking to sell services over the NBN, and from there, companies can negotiate with NBN Co for their own wholesale broadband contract.

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