Transparency will help Telecom - in Australia

By PETER GRIFFIN telecoms writer

Telecom's Australian operation AAPT is expected to benefit from legislation to be introduced into the Australian Parliament today that will help it win fair wholesaling deals from major rival Telstra.

The legislation will empower Communications Minister, Senator Richard Alston, to direct Australian competition watchdog, the ACCC, to force Telstra to provide commercial information - a process that is designed to make its business more transparent.

A key aspect will involve splitting Telstra's retail and wholesale accounting arms to provide a clearer picture of the costs Telstra faces and therefore the wholesale prices that it can reasonably charge competitors like AAPT, Optus and Vodafone.

As in New Zealand, the level of wholesale pricing determines the extent to which rivals can make inroads into fixed-line telco services.

Alston said splitting the accounting divisions would ease concerns that Telstra was using its wholesale power to subsidise its retail activities so that it could undercut its competitors on price.

Telstra's competitors have enthusiastically welcomed the move but the opposition Labor Party sees it as a backdown.

Labor is saying the change has put more power in the hands of the minister, rather than the ACCC.

"Telstra has nobbled the minister and ensured that the ACCC is kept at bay," said Labor's communication spokesman, Lindsay Tanner.

AAPT's regulatory director David Havyatt said many industry players had called for tighter "ring-fencing" rules that would have required Telstra to physically restructure its business, separating wholesale from retail operations, a change that he did not believe that was necessary.

"I don't think there's been any back-tracking by the Government at all.

"The Government could have [gone further], but we think that transparency, being able to observe whether Telstra is operating anti-competitively or not, will be achieved with the proposals," he said.

Telstra's response has been muted and it says it will "wait to see how it works in practice".



Locally TelstraClear is itself battling for a fairer wholesaling regime, ironically putting it in the reverse position to Telstra, its 58.4 per cent shareholder.

TelstraClear has lodged an application asking the Commerce Commission to review the prices Telecom charges TelstraClear for wholesaling its services to its customers.

TelstraClear's chief executive Rosemary Howard said transparency in Telecom's wholesaling pricing did not exist, but was needed to check whether other retailers in the market were getting a fair deal from Telecom on wholesaling.

A draft decision on the issue is expected next month.