iiNet: Telstra will ruin the National Broadband Network

Telstra could launch the 'mother of all court cases' if open access regime is implemented

iiNet has declared that the Rudd government's National Broadband Network (NBN) will be a failure with higher fees for customers, fewer ISPs and a decline in innovation and competition if the current access and regulatory regime is not "dramatically reformed".

iiNet made the announcement in a report submitted to the panel of experts appointed by Broadband Minister, Senator Stephen Conroy to advise the government on construction of the network.

The ISP's general manager of regulatory affairs, Steve Dalby, told Computerworld that the major calls for reform made by iiNet relate to the arbitration process and Telstra's conflict of interest in its role as an access provider to its business competitors.

"The starting point of the regulation needs to be the provision of core services; the components that other people take and build a service with which are currently being offered by a company that has a conflict of interest. We need to do Telstra a favour and remove this conflict of interest," Dalby said.

"The conflict Telstra has is that on the one hand it is a commercial business and its directors have obligations to shareholders. Yet at the same time the government is saying it must provide these components to its competitors. It's a straightforward, simple and obvious conflict of interest. It's not rocket science that has to be explained," he said.

Left unchecked, Dalby believes Telstra's dominance in the current access regime will "dampen" the growth of competition and investment in the sector. He also said it will hinder the provision of innovative services for consumers, which translates to lower prices, better products and more choice.

Dalby said that relieving Telstra of this conflict will change the telco's behaviour as it would no longer have the motivation to hinder access to its competitors.

"Maybe this whole drawn out saga of disputes and appeals, high court and federal court appearances would all go away. Because if the company that was providing the components was not allowed to compete with the people it was providing them to, its only motivation would be to be the most efficient and effective wholesale provider of network components that it could be," he said.

iiNet is also calling for reforms to the arbitration process, citing the example of the ULL that was declared a regulated product in 1999, but 10 years on still does not have a uniformly regulated price.

"The process we use to resolve disputes is really not working. We're talking [about] a time scale of multiple years in an environment which is supposedly dynamic, supposedly fostering competition."

Dalby, and iiNet, want to the see the arbitration process significantly sped up and applied across the board once a decision has been made.

"If iiNet for example finished off one of these arbitrations and gets to a point where they know what they are going to pay for something, that should automatically flow on to the rest of the industry, but it doesn't. If I've finished my case and you want to get access too, you have to start the whole process over again, and that's just ridiculous," he said.

Telecommunications analyst Paul Budde agrees that the expert panel advising the federal government on regulations for the new network must arrest the current problems of accessing the Telstra network.

"It's essential we get it right, there must be good regulations in place that make it very, very clear how to access the new network, what is involved in doing that, what the prices are and so on. We don't want to continue these problems going forward, for the last 10 years we've seen court case after court case and that's not what you want in that environment," Budde said.

"Minister Conroy is calling for an open access regime which is fantastic because that would mean everybody has the same access to the network - Telstra, Optus, iiNet, whoever."

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