KEY POINTS:
After the stunning A$15.3 billion ($17.6 billion) sale of the third tranche of Telstra shares a few weeks back, the federal Government and the competition regulator were in another punch-up this week with the telco giant over pathetic broadband internet speeds.
Telstra refuses to run an ADSL2+ network five to 40 times faster than it does because it claims it needs regulatory certainty to ensure rivals can't piggy-back its infrastructure too cheaply.
But that argument came in for a blistering attack by the head of the competition watchdog, Graeme Samuel, who accused the telco of using subterfuge on regulation for a broader agenda.
In fact it was Telstra boss Sol Trujillo who started the spat on Wednesday when he told an Australia-Israel Chamber of Commerce lunch in Melbourne that he agreed with Rupert Murdoch's comments that Australia's broadband services were a disgrace.
"From me, you will find no argument," Trujillo said, arguing the federal Government needed to invest vast sums into a nation-building project and hinted that the Australian Competition and Consumer Commission's refusal to give Telstra regulatory protection from competitors using its infrastructure was to blame.
Those inferences triggered an unprecedented attack on Telstra by Samuel, the ACCC's chairman, in which he accused the telco of using "regulatory constraints" as subterfuge for another agenda at a conference in Sydney.
Samuel rejected Telstra's competition claims and challenged it to "flick the switch" on existing dormant capacity within its network that could boost broadband speeds by up to 40 times. "Activate [the high-speed broadband] you have already installed and offer high-speed broadband to the vast majority of Australians, as you can," Samuel said.
"Don't wait for your competitors to move first, thus forcing you into action. And stop using the now overplayed excuse of 'regulatory constraints' as a subterfuge, in the hope that you might be able to persuade our politicians to remove regulations designed to foster and promote competition in the communications sector for the benefit of all Australians."
Samuel's attack was supported immediately by federal Communications Minister Helen Coonan, who repeated accusations that Telstra's policy of deliberately stifling broadband speeds was to the detriment of the public interest.
"Telstra cannot continue to falsely claim Government regulation stands in the way of giving faster broadband," she said.
"There desperately needs to be a dose of reality injected and an end to the Government blame game."
But again, the heavy artillery from the Government and the ACCC did little to dent Telstra's resolve - the company's outspoken regulatory chief, Phil Burgess, hit back at Samuel, accusing him of trying to "micro-manage the telecommunications environment by worn-out regulations that are more than 10 years old".
Burgess said Telstra would switch on the fastest speeds possible on its ADSL2+ network and resurrect plans for a fibre-optic network in a "New York minute" if the ACCC gave "bullet-proof assurances" that Telstra's investment would not be "pillaged" by the regulator.
"It is in his [Samuel's] hands," Burgess told the Sydney Morning Herald.
"He has all the powers to decide whether we remain at the bottom of the list or the top."
Telstra has said in the past it wants a "definitive assurance" from the ACCC that it would not be forced to offer rivals access to the ADSL2+ network too cheaply.
The company turned on the network last month but only offered the fastest speeds of up to 20 megabits per second in areas where rivals such as Optus and iiNet already offer ADSL2+, equating to about 46 per cent of the population.
Samuel said Telstra could simply seek an exemption under the Trade Practices Act if it wanted a legal guarantee that its ADLS2+ services would not be regulated. But Telstra wants more. The cat fight continues.
* Paul McIntyre is a Sydney journalist
