Thursday, December 13, 2007

Australia - Competition notices

Telstra snarls fibre-optic network

THE ACCC will scrap use of competition notices after its last notice, issued two years ago, was defeated in the Federal Court yesterday.

The rarely used notices were designed to help combat telco competition abuses by allowing the regulator to issue the notice before taking the matter formally to court.

While Telstra can take some comfort in the fact that the judicial process does indeed sometimes work in its favour, its head-in-the-sand attitude to the new fibre optic network is looking increasingly out of sync with the rest of the world.

Singapore this week was just the latest country to opt for not one, but two layers of separation of its proposed network when issuing guidelines on its present next generation network tender.

The Singapore statement comes just weeks after European regulators proposed much the same, some years after Britain has already proceeded to operational separation and after New Zealand has done likewise.

More to the point, Babcock&Brown, the owner of the Irish Telstra equivalent Eircom, is moving apace to create separate vehicles to spin off either its network business or service arm.

It is doing this to create shareholder value, which is what Telstra's Sol Trujillo claims to be on about while wrapping himself up in his monopolistic national flag.

The tender process itself also does throw new light on federal Digital Minister Stephen Conroy's ambitious timeline for his rollout.

Singapore started the tender process in December last year, selected a short list of 12 companies in March and plans to announce the winner in March next year with the building to start in the third quarter of next year.

The Australian Government has yet to unveil the task force that will write the tender to be issued next year with the aim of having the network construction started by year's end.

Most would consider that a stretch, with the exception being if Telstra wins the tender.

It is already well advanced on installing fibre to all big city exchanges and to many street corners, with the next step the so-called last mile to people's homes.

Telstra is back to its old games, which were invented in the days when its management was running a regional monopoly service around Denver, Colorado.

Singapore is a step ahead of Australia having a separately owned cable network controlled by Star Hub, the Singtel network and now a proposed fibre network.

The new rules apply just to the latter and will require a separately owned and operated network operator, a separate company to manage the traffic on the network and separate service providers.

As in Australia, the owner of one or more of these layers could well be Singtel (the Optus parent company) just as Telstra could end up owning the new Conroy network.

The cacophony coming from Telstra right now is conflicting, as in if you don't play by our rules we will just play in the unregulated mobile space and we are the only ones who can operate the network.

Put the noise to one side as the usual irrational positioning even before the rules of the game are known.

By definition, fibre-optic networks are built for open access, its just the terms that will be in question and it's too early for Telstra to try to change Conroy's job title to Minister for Telstra Litigation.

No right of challenge

THE reason why the ACCC has only issued two competition notices in the 4 1/2 years of Graeme Samuel's tender is they force him to go public with his argument by putting Telstra on notice that if it proceeds with the stated behaviour it will face potential penalties and action from rival parties.

Under the draft legislation to be released for public comment by new Competition Minister Chris Bowen, the ACCC will be able to seek interlocutory judgments against a company and continue issuing its high-powered discovery notices under section 155.

This applies to all companies, not just Telstra.

Korean Airlines is challenging the issuing of those notices against it in the airline cartel case, arguing the notices are invalid because the ACCC had already decided to take the action.

Under present law, once a court case starts no new notice can be issued and Korean would be creating a new law if it won its case.

But under Bowen's plans, no company will have the right of challenge.

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