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Is the telco reform Bill still needed?

ZDNet Australia asked Optus, Internode and iiNet whether telecommunications reform is still needed now that the government has reached a non-binding business agreement with Telstra.
Written by Ben Grubb, Contributor

ZDNet Australia asked Optus, Internode and iiNet whether telecommunications reform is still needed now that the government has reached a non-binding business agreement with Telstra.

As well as reforming the telecommunications sector, the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 offered Telstra a choice to voluntarily opt for structural separation or face an imposed functional separation coupled with tough sanctions, including a possible ban on acquiring spectrum for 4G wireless services.

Steve Dalby

iiNet's Steve Dalby(Credit: iiNet)

That was until the Federal Government and the company charged with building the National Broadband Network (NBN), NBN Co, reached a non-binding heads of agreement with Telstra.

Under the $11 billion deal, NBN Co will have access to Telstra's backhaul fibre and its network of pits, ducts and wires. Telstra has also agreed that as the government's planned network is rolled out, it will migrate its customers from its copper and cable networks to the new fibre network. Telstra will, however, still use its cable network to fulfil its contract with pay TV company Foxtel.

Telstra will also decommission its copper, which in effect ends its life as a wholesaler.

With the heads of agreement being signed, some have asked whether reform is still needed.

Yet iiNet's chief regulatory officer Steve Dalby said passage of the Bill was "still quite important". He said that it wasn't necessarily about the legislation itself, but what it aims to achieve.

"What we're trying to achieve is that change in behaviour from an organisation that can control the marketplace through its infrastructure," he said of Telstra.

If it turned out that the legislation was rendered unnecessary because Telstra changed its behaviour without the need for the Bill's passage, there was "no harm done" in abandoning it, according to Dalby.

"But I think it would be important of having the safety net of the legislative changes," he said.

The safety net might, for example, be required if the Opposition wins the next election and rolls back the work Labor has done on the NBN.

Internode carrier relations manager John Lindsay said the Bill's passage was "as important as it was before".

"So a year ago, pre-NBN Co, the industry had a whole pile of issues with the way in which the regulatory environment a) works, b) is enforced," Lindsay said. "Those concerns have not gone away and there's still ample opportunity for Telstra to misuse its market power and gain the regulatory system. And I don't see that that is going to become any less of an important strategy for Telstra in the years between now and NBN services becoming available.

"I think we'd support [the Bill] for that reason alone," he said.

Lindsay said that separating Telstra's retail and wholesale arms was only one facet of the Bill. Giving "more teeth" to the Australian Competition and Consumer Commission (ACCC) and more protection to consumers was another Bill aim.

"But what concerns me is that we've had close to three years of the current government and they've been unable to get this legislation through the Senate," Lindsay said. "If there is a change of government then who knows what happens next?

"And if the current government is returned they have to essentially start the clock again and start a new queue of legislation to get it though the Senate.

"So there's no particular guarantee that after the election this legislation will be passed," he said.

Optus' general manager of regulatory affairs Andrew Sheridan said that from Optus' perspective, it was "absolutely vital" that the Bill was passed.

"We've argued long and loud for this Bill to be passed because it is all about creating a pro-competitive landscape that Australia deserves," Sheridan said.

"Whilst there has been an announcement of a heads of agreement between Telstra and NBN Co, first, I think we have to be a little bit cautious because it's non-binding. There are further, more detailed discussions to have before they reach a binding agreement," he said.

He said that the other important reason the Bill needed to be passed was because it would "keep the whole process honest" between Telstra and NBN Co.

"There are ... amendments [that] provide some heads of power for the ACCC to actually review the arrangement that Telstra puts forward to implement structural separation as it moves towards the NBN. It will also give the ACCC the power to have a look at Telstra's migration plans to make sure they're appropriate, fair [and] competitively neutral," Sheridan said.

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