Telstra submits regulatory wish-list to government

Telstra will bow out of NBN if structural separation is enforced.

Telstra has submitted to the Federal government its proposal for what regulatory framework it believes is needed to meet Senator Conroy's vision of an open, competitive high speed national broadband network.

Under the tender process, a submission outlining regulatory framework for the NBN is required by all bidders, but is also open to non-bidders who wish to have a say in the regulatory framework of the new network.

The key component of Telstra's submission is a call for regulatory certainty, with an agreement on the terms of core wholesale access to the NBN to provide certainty for investors and wholesale customers and to attract the multi-billion dollar investment required to build the network.

Telstra has said that if the NBN is going to be built, the builder needs up-front certainty that its investment will not be undermined or given away by regulatory changes once a decision to invest is made.

Senior media relations manager for Telstra, Jeremy Mitchell, said that currently a lack of regulatory certainty, and the fact that regulatory settings have been designed for the old network, has led to a lack of investment because the ACCC has the power to change regulation and pricing at will.

"If you get certainty in the market for whoever wins it - Telstra or not - they are going to need that certainty because you are talking about billions of dollars of investment. The return on that capital will happen over years, even decades, so you need that certainty to know what rules will be in place and what will be happening as far as returns on that investment," Mitchell said.

Telstra also rejected claims that structural separation is essential in Australia and said it will remove itself from the build process if this occurs.

"This idea that our competitors are arguing for - the actual split of Telstra - is proven not to have worked overseas and if it is on the agenda we will not be a participant in the national broadband network," Mitchell said.

As part of its submission to the Federal government, Telstra submitted evidence from a number of independent international experts stating that a split of Telstra is unnecessary and would not work.

Kip Meek, former commissioner of the UK's independent telco regulator and competition authority, Ofcom, said the UK (British Telecom) form of structural separation was designed to address severe problems of non-price discrimination which he does not believe exists in Australia.

"I would not recommend that the UK form of separation be used as a starting point in the Australian context," Meek said.

"I am also of the view... that more radical measures, such as structural separation, would involve substantially escalated risk and costs. The demand risks and uncertainties associated with building a Next-Generation Network, especially where it is intended to replace the PSTN, seem to me to raise doubts about whether a non-vertically integrated approach would be able to achieve the necessary level of investment co-ordination."

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Andrew Hendry

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