The Telstra – ACCC regulatory game – the longest running show in town, back for a new season

September, 2016

By Mick Coleman, Partner

NBN Co’s purpose in life, since it was a twinkle in Minister Conroy’s eye in 2007, was always the (re)nationalisation of the last, greatest monopoly in Australian telecommunications.

Telstra shareholders bought from the government a bunch of nationally significant infrastructure assets.  But in a free market, things change, and most of what Telstra ever did has been opened to competition by ministerial fiat, the ACCC or market forces – phone books, handsets, telephone exchanges, mobile networks, satellites, sub-sea cables, retail shops, business systems (remember Commander PABXs?), data transport and the rest.

The last monopoly standing was the copper network – the rusty, water-logged, high maintenance, 19th century technology that somehow delivers all the magic to 10 million premises around the country.

NBN Co was supposed to achieve two things. First, fix Telstra’s vertically integrated power by transferring the network back to national public ownership, correcting a momentary oversight from Minister Beazley when he kicked off privatisation.  Whatever your view on the merits, that is happening.  (The NBN was also sold as a nation-building trade-up from copper to the hotly debated fibre-and-friends “Multi Technology Mix”, but Telstra and others would have done that anyway.)

The second job for NBN Co was to shrink towards zero the regulatory oversight needed to make Telstra deal fairly with the rest of the industry.  Every phone company uses Telstra’s fixed network to deliver phone and data services to their customers, and the 15 or so “declared services” they buy off Telstra to make this work are closely regulated.  But once Telstra hands the network to NBN Co and becomes just another Retailer, the only job for the ACCC is to tick off the handover terms (the “Definitive Agreements” of 23 June 2011), set the prices for NBN Co services and check in every few years, right?

Hold up, not so fast.  In early September 2016, the ACCC published an easy-reading 12 pager that illustrates that you can shift the regulatory pressure points, but lifting them altogether is a long haul project.  We’ve been on this journey since 1991, and the latest manifestation of Telstra power is Telstra’s network knowledge, engineering and technical strength, which I can attest from a decade of working there.

It turns out, to manage the journey of building Australia a new network, NBN Co’s best bet is to outsource the tricky parts to … Telstra.  This non-surprise gives the ACCC some new “significant competition concerns” – Telstra getting early access to NBN infrastructure, preferential service activation and better information.  And of course out of all the old concerns that the NBN is supposed to dissolve, the number that are still concerns = 100%.

So, the regulatory spotlight amps up a little, shifts to another part of the playing field and the game goes on.

The ACCC paper NBN Co – Telstra service delivery agreements – ACCC assessment can be found at https://www.accc.gov.au/system/files/NBN

Mick Coleman is a partner in the corporate advisory group at Mills Oakley and was previously a Telstra employee.  The views expressed are his own.

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For more information, please contact:

Mick Coleman |
Partner
T: +61 3 9605 0060
E: mcoleman@millsoakley.com.au

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