Competitors challenge Telstra's role in providing bush services

ABC PM - Wednesday, 3 August , 2005  18:21:00

Reporter: Toni Hassan

MARK COLVIN: Telstra's competitors today laughed off the company's complaint that it can't afford to meet its long-term service obligation to the bush.

AAPT and Primus say comments by the Managing Director Sol Trujillo suggest that Telstra is not up the to the job.

They think that the law should be changed, but not to make life easier for Telstra. Instead, they think the rivals should be given more opportunity to provide basic telephone services in rural and regional areas.

Meanwhile the Communications Minister, Senator Helen Coonan, has also made it clear today that she expects Telstra, as the dominant player, to give people a phone wherever they live, as Toni Hassan reports.

TONI HASSAN: After his first visit to the bush, the regional centre of Lismore in northern New South Wales yesterday, Telstra boss Sol Trujillo complained about the funding arrangements for the universal service obligation agreement recently mandated by Government at $250 million.

Telstra gives 70 per cent of the money but then spends it too. It's competitors give a third of the total amount, even though they collectively share less than 10 per cent of the industry's profits.

JON STRETCH: The message Telstra is sending is that they don't think $250-million a year is enough to maintain service in the bush.

TONI HASSAN: Jon Stretch is the Chief Executive of AAPT.

JON STRETCH: And I think if they've got that opinion, then they should give their network to somebody who does think $250-million is enough.

TONI HASSAN: Mr Stretch says he's comfortable with a national aspiration that basic telephone services be delivered with equal cost and quality to those in the bush as those in the city.

JON STRETCH: We're comfortable with the calculations that see that at about $250-million a year. We're uncomfortable that the rest of the industry is paying a third of that when Telstra clearly benefit, in our view, to a much greater degree.

TONI HASSAN: In his speech last night, Sol Trujillo reinforced and expanded last week's pronouncement from Telstra's regulatory affairs head that the funding for the universal service obligation is "unsustainable".

Telstra's universal service obligations to the bush were a financial drain rather than a profit centre.

Mr Trujillo also said regulations imposed on it belong to the last century.

Primus is another key Telstra competitor, behind AAPT and Optus. Its head of regulatory is Ian Slattery.

IAN SLATTERY: From the remarks that are being reported he seems to fail to remember that he's running a monopoly.

TONI HASSAN: Communications Minister Senator Helen Coonan is not moved by Telstra's cry for regulatory change.

She suggests Sol Trujillo has some learning to do, and his experience at the top of US West, a mid-sized telco servicing the western United States, is not the same as running Australia's national telco.

HELEN COONAN: Well, he may not be aware that Telstra, as a full service telecommunications company, actually gets off quite lightly compared to international standards. BT, for example, has to provide these services without any contribution from industry, and from our researches, most other telecommunication companies of Telstra's size would provide all these services so that consumers get decent services across the whole of their terrain.

TONI HASSAN: Do you think he's spoken prematurely? He's been in the job too few days to say what he's said?

HELEN COONAN: I think, to be fair to Mr Trujillo, he comes out of a different sort of environment. We've had a culture here of a competitive regime that encourages other carriers. We've now got over 100. So our model is to encourage competition, to provide basic consumer safeguards by way of regulation and that relates to the universal service obligation that was referred to in his speech.

TONI HASSAN: The National Party, whose support is essential to gain parliamentary approval for the Telstra sell-off, is demanding the Government set up a multi-billion dollar perpetual fund from the proceeds of the sale to finance future telecommunications development in the bush.

Telstra says it's willing to work with Government to determine the right size of that future-proofing fund.

Senator Coonan is non-committal, but tonight is comfortable with a privatised carrier drawing on substantial national funds.

HELEN COONAN: We know that you can't spend more than about $100-million a year in any event when you're looking at telecommunications infrastructure and of course the technology and the solutions change constantly.

TONI HASSAN: So what's the ballpark? Is two billion outrageous?

HELEN COONAN: Well, it depends on what you're trying to achieve. What I'm just saying, if you work backwards from what the Government knows is a credible response to a review, it gives you some idea of what's required.

MARK COLVIN: The Communications Minister Senator Helen Coonan ending that report from Toni Hassan.