OECD Report Underlines Need for Senate Action to Separate Telstra

The OECD has called for the separation of Telstra’s network and retail businesses, saying it remains “one of the most vertically integrated providers in the world”

The report, comprehensively reviewing Australian regulatory reform, was further evidence that the Senate must pass the Government’s legislation to separate Telstra, strengthen competition laws and enhance consumer protections, the CCC said today. (see link below)

“The OECD unequivocally backs the arguments that the CCC has been making for years – that Telstra’s control of the monopoly network is harming consumers and suffocating competition,” CCC executive director David Forman said.

“The report says the ‘failure to separate completely the network-monopoly elements from its competitive operations may be dampening competition and complicating regulation’.

“It goes on to say that separation of the infrastructure from retail activity should be considered.”

The OECD report also suggested that Telstra be required to sell its stake in Foxtel and its Pay TV cable, saying: ‘Competition and diversity of programme sources could also be enhanced by divesting Telstra from its ownership relationship with pay-TV providers.’

“The CCC has been calling for these measures since 2004. Legislation presently stuck in the Parliament awaiting consideration by the Senate should deliver on these reforms, and has been supported by competitors, consumers and regulators alike,” Mr Forman said.

“This new OECD report underlines the importance that this Bill is passed, and passed this month.

“The CCC again calls on all Senators to vote for this crucial reform, and put aside petty, short term politics.”

Contact: David Forman
Executive Director
CCC Inc
0438121114

http://www.oecd.org/document/63/0,3343,en_2649
_34141_44529023_1_1_1_37421,00.html#ES

OECD Reviews of Regulatory Reform - Australia: Towards a Seamless National Economy

Extract from Pg 179

...Similarly, the continued, albeit indirect, public ownership interest in the historic telecoms monopoly and the failure to separate completely the network-monopoly elements from its competitive operations may be dampening competition and complicating regulation. Consideration should be given to separating infrastructure management from service provision, notably between the management of broadband Internet access infrastructure and marketing activities, in order to encourage construction of a fibre optic network without impairing competition. The plan for a separate fibre optical network is a promising approach. The government has announced that this network will be wholesale only. The government may invest up to AUD 43 billion with the private sector.
Its financial involvement in constructing a fibre optic Internet system should not end up strengthening the dominant position of the incumbent. Competition and diversity of programme sources could also be enhanced by divesting Telstra from its ownership relationship with pay-TV providers.