Australia: Telstra has acknowledged concerns about equivalence and transparency

[cio] Telstra has acknowledged wider telecommunications industry concerns about the need for greater equivalence and transparency in its submission to the National Broadband Network: Regulatory Reform for 21st Century Broadband discussion paper discussion paper.

In the submission, the telco said it had focused on a number of practical enhancements to address these concerns without the need for costly functional separation, particularly given that structural separation is to be delivered through the NBN.

These included the creation of an independent technical Telecommunications Adjudicator, similar to the Office of Telecommunications Adjudicator in the UK, as a practical, fast-track way to enable access seekers and access providers to resolve equivalence and service level concerns.

“Further, an Australian Telecommunications Adjudicator could make binding decisions, whereas in the UK, the Adjudicator can only make non-binding decisions,” Telstra said in the submission.

To address concerns over Telstra’s wholesale pricing to its retail business, the company proposed an “enhanced price monitoring safety net”.

Under this system, companies with substantial market power in a relevant telecommunications market that provide both wholesale and retail services in that market would be required to provide ‘price equivalence notifications’ to the ACCC within two days of any mass market price changes to designated services, Telstra said.

These notifications would need to include the information necessary to satisfy the ACCC that price changes are consistent with the price equivalence requirements and the ACCC would have enhanced industry reporting powers, it said.

In its submission on the discussion paper, Optus argued that many of the problems identified with the current market structure and the regulatory arrangements have their root cause in the vertically integrated structure of Telstra and the corresponding misalignment of incentives this creates.

“As a dominant retail and wholesale supplier Telstra has strong incentives to act in a manner that discriminates against its competitors,” Optus’ submission said. “Coupled with a weak regulatory system it has the opportunity to act on these incentives to exploit its market power to the fullest possible extent.”

Optus also called for greater powers for the competition regulator, the Australian Competition and Consumer Commission, stating that the ACCC must be equipped with sufficient powers for it to take targeted and effective action where competition issues arise, particularly before the NBN is implemented

“The current regulatory regime was established in order to control the market power of Telstra and encourage competition,” Optus said. “However the current framework has been ineffective in preventing the incumbent from exercising its market power and has failed to make the fixed line market truly competitive.”

The company said that in addition to the basic issues associated with vertical integration noted above, a number of specific aspects of the access regime are also clearly ineffective, including the basic negotiate/arbitrate framework, the ACCC’s requirement to consider access undertakings and exemption obligations and the appeals processes (including both merits review of ACCC decisions and the Administrative Decision Judicial Review [ADJR] process).

“These dysfunctional elements of the current arrangements have prevented the regulatory authorities from taking effective enforcement action thereby denying access seekers the ability to achieve certainty of access to services and certainty on the terms of access,” it said.

Minister for broadband, communications and the digital economy, senator Stephen Conroy, said more than 120 submissions on the discussion paper had been received from a range of individuals, industry players and other stakeholders.

Telstra calls for new independent Telecommunications Adjudicator