Australia - Telecoms Industry - Competition and Regulation Issues - 2009-2011

Synopsis

It has been reasonably quiet on the regulatory front recently. While the underlying economics for competition are still weak the changes to ULL have greatly improved the market for broadband competition and significant progress has been made since 2008.

In the meantime changes have taken place regarding the main future focus of the regulatory regime – particularly, of course, in relation to the NBN. There has been a rare level of agreement among all parties about the regulations proposed for this new network, and a promising atmosphere of cooperation in working this out further.

The real issues have to do with the interim situation. Proposals are on the table to structurally separate Telstra but this has been held up by Parliament. However, given the Heads of Agreement between the government and Telstra it is now in Telstra’s interest also to work towards structural separation, and with or without regulation this will begin to create interesting new dynamics around the current wholesale and access activities.

It is in Telstra’s interest to win as many wholesale customers as possible for the new environment and it will need to develop a transitional regime to facilitate this, which can’t look much different from whatever it will be providing on the NBN.

Another major reform item that came out of the agreement was a new regime for the USO, with the proposal to form a new company for that purpose.