Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Hansard source

I move:

That the following legislative instruments be disallowed:

(a)

the Telecommunications (Operational Separation—Designated Services) Determination (No. 1) 2005, made under subclause 50A(1) of Schedule 1 to the Telecommunications Act 1997; and

(b)

the Telecommunications (Requirements for Operational Separation Plan) Determination (No. 1) 2005, made under paragraph 51(1)(d) of Schedule 1 to the Telecommunications Act 1997.

Labor are moving to disallow the Telecommunications (Requirements for Operational Separation Plan) Determination (No. 1) 2005 because we believe it to be a public relations exercise that will achieve none of its stated goals. The determinations are conceptually flawed and have been introduced without sufficient consultation with an industry that violently opposes them.

Senator Coonan noted last year that she was very resigned to the fact that the Operational Separation Plan will not meet everyone’s expectations, and I am pleased to see that we have drawn Senator Ronaldson out into this debate, because I know from the strength of his public commentary that he could not possibly think that this goes anywhere near far enough to achieving genuine operational separation. So I will be looking for that dive with a half-pike backflip as you explain and justify to the Australian public how you are going to vote for this plan, Senator Ronaldson. Unfortunately, Senator Coonan has met no-one’s expectations. She certainly will not have met Senator Ronaldson’s expectations, if he is being truthful in the chamber.

The object of operational separation to constrain Telstra’s ability to anticompetitively take advantage of its vertically integrated ownership of both natural monopoly network elements and its retail business is a worthy ambition. There is clearly a need for a regulatory response to constrain Telstra’s ability and incentive to use its vertically integrated structure to discriminate against access seekers. Telstra has a long history of employing subtle actions to frustrate competitors’ efforts to exercise their legal right to obtain access to Telstra’s bottleneck infrastructure.

ACCC investigations have consistently found that the fault-handling and connection services offered by Telstra to wholesale residential customers are inferior to those that Telstra provides to itself. That was the ACCC, Senator Ronaldson. Telstra’s use of separate and less reliable computer systems for competitors, coupled with the underresourcing of the business groups providing services to competitors, have been identified as the cause of this discrimination. Obtaining access to Telstra’s exchanges for the installation of DSLAM equipment, as access seekers are entitled to do by law, currently takes a minimum of four months and, in some cases, up to a year—one year, Senator Ronaldson.

Appointments are missed, keys are lost and mystery technical problems are found—not to mention the famous fence built around the exchange here in the Australian Capital Territory to keep TransACT out. You were there, Senator Ronaldson, when the evidence was put before the parliament about it—anything to stymie competitor access to Telstra’s bottleneck infrastructure. Morgan Stanley has even suggested that Telstra’s vertically integrated structure will allow it to significantly delay the financial impact of the ACCC’s recent ULL decision by restricting access to backhaul and exchanges. That is what the market expects Telstra to do. It is the kind of behaviour that operational separation is designed to stamp out.

Operational separation need not impose a significant cost burden on Telstra. You only need to look at the United Kingdom to appreciate this. Since the implementation of operational separation on BT in the UK, BT has experienced eight per cent growth and a two per cent increase in profits. The CEO of BT has stated:

Broadband growth continues to be very strong with the number of BT Wholesale connections now standing at more than seven million. This is pushing the UK to the front of Europe in broadband take up.

The transformation of the business continues to deliver value to our customers and shareholders.

So a more robust operational separation can be a win-win situation for all involved.

However, the model that the government has adopted for its operational separation plan is fundamentally flawed and is doomed to fail—and you know it is doomed to fail, Senator Ronaldson. Labor believes that there are significant problems with the government’s operational separation model, stemming from the regime’s underlying legislation. Under the government’s model—the one that you are going to vote for, Senator Ronaldson—Telstra is separated into retail, wholesale and network businesses. Instead of remedying Telstra’s ability and incentive to discriminate against access seekers, this structure effectively institutionalises differential treatment of wholesale access seekers when compared with Telstra retail.

Under the government model, which Senator Ronaldson will defend shortly, wholesale access seekers will be forced to acquire services from the wholesale business unit, while Telstra retail will be able to acquire services from Telstra network. The fact that wholesale customers acquire different products from a different unit of Telstra to Telstra retail is an open invitation for Telstra to ‘game’ the regime and frustrate the effectiveness of the regime. You and I have both experienced Telstra’s gaming recently, Senator Ronaldson. You were at Senate estimates with me. You sat there and questioned Telstra and listened to the gaming in their answers. You know what I am saying is correct, so do not sit over there and interject: ‘Leave me something to say.’