Regulatory uncertainty is costing us, says Telstra

A bone of contention for Telstra is that many cities already have alternative networks

Changing the regulatory framework of the telecommunications industry is needed quickly, says Telstra which claims the regulatory uncertainty is costing it the deployment of its next-generation networks, while at the same time providing a leg up for its competitors.

Speaking at a competition summit organised by the Service Providers Association, (SPAN), of which Telstra is a member, Telstra's general manager of regulatory affairs, Tony Warren said that while the telecommunications industry has changed rapidly since deregulation, the regulation of the industry has not.

Telstra, he said, was pushing for changes to the regulatory process because it was being unfairly treated under current regulations.

As an example, he cited the disparity in Australia's CBDs where fiber, which is supplied by a number of carriers, rather than the Telstra-owned ULL (unbundled local loop) dominates the landscape. "If the telco regime has some kind of discipline those areas won't be regulated."

Regulation needs to be modified so that it does not "choke off" investment, he said. Additionally, regulation should apply to legacy networks rather than new services.

A bone of contention for Telstra is the fact that in most capital cities an alternative to the ULL, in the form of Optus' HFC network already exists. Sydney and Melbourne, for example both have more than 80% penetration of Telstra-alternative networks to the home.

However, Telstra is still forced by the Australian Competition and Consumer Commission to charge low prices for competitors to access its copper wires.

"In the CBD and metropolitan areas there is a real alternative supply... which is winning customers in the marketplace."

"Pretending that it is not [competitive] and needs a high regulatory environment is not justified," Warren said.

Optus' Paul Fletcher said Telstra was doing its bit to kill competition.

Raising the fixed line cost of the ULL was one measure.

He also said Telstra's intention to deploy Fiber to The Node (FTTN) is part of its attempt to discourage investment in the ULL, whose copper lines need constant maintenance.

Fletcher said Optus believes in increasing bandwidth options to customers, but that the ULL should be protected. "There is still life in it."

According to Warren, Telstra needs to invest in FTTN because only 40% of residents in cities live within 1.5 kilometres of an exchange, thus precluding them from access to very high speed DSL broadband. The closer residents are to exchanges, the easier access to speed of 10Mbs and above becomes. According to Telstra, the only other way to get the remaining 60% is to use fiber.

However, due to "regulatory uncertainty", Telstra has been forced, Warren claims, to put a hold on its plans to roll out its FTTN broadband network. For Dennis Muscat, CEO of Pacific Internet, the discussion about connection is not the key issue. "It's the service [VoIP, mobility, video-on-demand and the like] that hang off this which is key. Most of which are not realised today."

To achieve this, he said service providers like Pacific Internet needed fair access to the network, fair pricing, and a fair amount of time to help build themselves up so a "quasi monopoly (of Telstra and Optus) does not manifest itself".

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