Telecom will hinder broadband: Telstra

By FRAN O'SULLIVAN assistant editor

Broadband will not be developed quickly enough if Telecom sets the pace, says Telstra chief executive Ziggy Switkowski.

"Until you've got a broadband connection into an IP [internet protocol] compatible infrastructure you don't have the national economy properly configured", he told the Weekend Herald at his Melbourne head office.

"Inevitably, Telecom do not want to provide any freekicks to competitors, but eventually they're going to have to provide access to their networks.

"The unconditional local loop is one way to do it. The ability to wholesale their broadband product is another way."

Switkowski said 10 per cent of Australian households had a broadband connection.

"Half of all new connections are being made by our competitors, who are reselling off our products and we're experiencing explosive growth."

He said the rapid development of telecommunications infrastructure in Australia would fuel the growth of new industries.

But he queried whether New Zealand's regulatory structures would enable fast development.

"The regulator has to make access available at reasonable rates - New Zealand is left with only two or three Third World economies in not having taken that step."

Switkowski said Helen Clark's Cabinet should consider two elements when deciding next week whether to end Telecom's monopoly on the phone network:

* The encouragement to both the regulator and Telecom to reach reasonable commercial agreements on the wholesaling of broadband to competitors and agreement on terms and conditions for network access.

* A reaffirmation of the commitment to competitive markets, with competition based on investment in infrastructure and reasonable access to the incumbent's infrastructure.

Switkowski said incumbents initially resisted new competition.

"Then you go to a phase where either because it is legislated or because your commercial interests get you there, you work with competitors as customers ... You provide them with access to your networks so that they can add value and expand the market, such as in broadband.

"The next phase is when the relationship becomes vital to the incumbent - after a while the incumbent will look to its wholesale customers and sometimes buy capacity off them.

"In Telstra's case in Australia, we're at the end of the second stage moving into the third stage."

New Zealand was years behind that. Telecom's position was rational "even if it is unhelpful."