090/05
3 August 2005

Regulatory Roulette is not an option for Telecommunications

The Minister for Communications, Information Technology and the Arts, Senator Helen Coonan, today emphasised the Government’s commitment to competition, consumer safeguards and targeted Government investment as the best means of delivering affordable, high-quality telecommunications services to Australian consumers.

“It is indisputable that Telstra is the dominant telecommunications provider in Australia and one that enjoys a greater level of integration than other incumbent carriers by international standards with a fixed line and mobile business, content and pay-TV interests,” Senator Coonan said.

“It is not unreasonable that Telstra is therefore required by legislation, regulation and licence conditions to undertake certain activities. For instance, the Universal Service Obligation requires Telstra to give people a phone, wherever they live. Telstra, as the USO provider, is subsidised by industry to carry out this function.

“This is not the case, for example, in the United Kingdom where BT is required to undertake its USO obligations with no contribution from either Government or industry.

“I understand there is a cost to Telstra of complying with its obligations. All telecommunications companies face regulatory costs, as the biggest telecommunications company it is not surprising that Telstra faces a higher cost than most.

“While the Government does not want to tie the industry up in red tape, we are committed to protecting consumers and this is best achieved by appropriate, measured and, as far as possible, competitively neutral regulation.

“Beyond the USO for basic phone services, the Government does not require or expect Telstra to invest in uncommercial ventures and we have a track record of making targeted investment to address market failure. Telstra has benefited from this funding and much of Telstra’s ADSL and mobile phone tower investment in regional Australia has been made possible by significant Government funding.

“Telstra has received close to $120 million to expand its CDMA mobile phone network, $150 million to provide untimed local calls to some of the remotest parts of Australia and Telstra is a major provider of subsidised broadband services under the Government’s $158 million Higher Bandwidth Incentive Scheme (HiBIS).

“I am glad the new Telstra CEO Sol Trujillo says he wants to keep providing quality services to the bush. But regional Australians do not expect the Government to leave them at the mercy of unregulated promises and fine sentiment - they do not want the Government to play regulatory roulette with their telecommunications services.

“Instead, they expect the Government to maintain the important consumer safeguards such as the price controls that apply to Telstra, the USO and the Customer Service Guarantee as well as support packages for low-income earners. This Government is committed to strengthening and maintaining these consumer safeguards regardless of whether we sell our remaining shareholding in Telstra.

“As is well known, I am close to finalising a review of the regulatory and competition arrangements that apply to the whole telecommunications industry, the price controls that apply to Telstra, the future-proofing arrangements that continue to provide adequate telecommunications services into the future and a model of operational separation that will apply to Telstra.

“The Government will continue to work with Telstra and other carriers to develop innovative solutions in telecommunications to deliver adequate and affordable telecommunications services to all Australians, regardless of where they live.”

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