The ACCC is to allow Telstra’s structural separation – which splits its wholesale and retails arms – during the roll out of the NBN. However the question is are they creating another duopoly?
After many months of work, including revisions to Telstra’s original proposals, the Australian Competition and Consumer Commission (the ACCC ) has given the SSU the green light and accepted Telstra will split into two, via its Structural Separation Undertaking (SSU) which will be implemented as it migrates services to the National Broadband Network. Certainly I feel we need ongoing surveillance of the National Broadband Network (NBN), in the wake of the announcement.
The announcement is back to the future for the Telco sector. It will be a great challenge for both competition policy and the regulator, and without close scrutiny NBN Co and Telstra will become what Telstra was less than a decade ago. A large monopoly owned by the state. Only this time there will be two of them, and they won’t be allowed to compete for customers – it is a duopoly.
Although it is to be welcomed that Telstra has undertaken to deliver price equivalence to all its copper-based access services and exchanges through new wholesale contracts, it needs to be ensured that – at least as a fallback position – the charges set out in ACCC access determinations will apply. However Telstra was always the ‘bad boy on the block’ and the new split for the NBN looks set to take the same route, with high if equivalent pricing. The failure of competition law to ensure access to the network allowing others to compete is to be deplored. It has yet to be tested as to whether the NBN will encourage new providers to flourish to compete between this new duopoly.
The ACCC has announced new measures which include specific commitments to ensure the quality of Telstra’s supply of regulated services, and the security of wholesale customer information. The undertaking also includes a raft of compliance measures and a dispute resolution processes, including an independent telecommunications adjudicator scheme.
The deal needs to be keenly observed by the regulators – and remember no corporate governance charter for the NBN has been presented to the public as yet. The compliance measures announced by the ACCC are to be welcomed, but there needs to be ongoing surveillance of Telstra and the NBN, and its impact on the productivity of all Australian companies.
The separation of Telstra is perhaps second only to the NBN in significance. Past ACCC experience says that we need an ongoing examination of the Telstra split up, and there remain many questions unanswered by the ACCC announcement. Will they unleash the highway or set up tollways? Will all the promises be kept – or is more regulation needed?
The SSU is a bonanza for lawyers and bankers – but few if any customers will see the benefit.
Michael Peters is a Lecturer in Business Law and Taxation at the Australian School of Business.