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Telstra: anti-competitive conduct « Previous | |Next »
March 23, 2004

The return of the privatisation of Telstra bill to the Senate (to sell the government's 50.05 per cent stake). The Howard Government just seems to be going through the motions.

What is the point of re-introducing the bill? What are they doing this for? Selling Telstra is not popular in the electorate given the very low service levels. Does it have something to do with the Free Trade Agreement?

We do need to address the competition side of things. Telstra's new cheap broadband prices are lower than wholesale DSL prices. We do not have a competitive market at the moment. The Australian Competition and Consumer Commission (ACCC) has questioned Telstra's tactics in the broadband market. Telstra is using its market power to stifle competition---"engaging in anti-competitive conduct" says the ACCC.

The Howard Government (Senator Minchin) is running the line that more competition can be delivered with privatisation and that the telecommunications market is highly competitive. This is cloud cuckoo land when the ACCC issued a notice to Telstra alleging that it was engaged in anti-competive conduct on broadband wholesale pricing.

What is needed is to give the ACCC the powers it needs to deal with the misuse of market power, including the power to break-up large monopolies.

Surely privatisation would increase, not decrease, Telstra's market power. As Chris Anderson writes in todays Australian Financial Review (subscription required, p. 63), an "unchained Telstra might bite."

If privatisation of telecommunications is to be the order of the day, then the power of the regulator needs strengthening to ensure a far more competitive market.

Update

In today's Australian Financial Review (subscription required) Daryl Williams, the federal Minister of Communications and Information Technology, argues that we should allow Telstra to compete unhindered. He says that:


"Driving the development of a competitive market is central to the future of the Australian telecommunication industry.This, coupled with consumer protection, is the government's core responsibility. The role of government is not to run Telstra.... To suggest that [Government] ownership of Telstra is required to effectively regulate Telstra...suggests that there is no effective means to regulate the rest of the market. This is plainly wrong. The decision the Australian Competition and Consumer Commission to issue a competition notice to Telstra last week is a perfect example of the regulatory framework at work."


Hardly. The argument is that the ACCC needs to be strengthened if we want the telecommunications market to grow and prosper. That's a different issue to the privatisation of Telstra.

| Posted by Gary Sauer-Thompson at 7:35 AM | | Comments (3)
Comments

Comments

Bit silly of the Dems to convict Telstra on an accusation by the ACCC. This won't turn out like the ACCC media stunt, photographed with boxes of files leaving Mobil offices, will it? Telstra seem quite comfortable with taking on the ACCC over their stance on broadband pricing. Does the ACCC want Telstra to immediately put up retail prices to consumers again?

Maybe the Dems have a bit more knowledge than that. Optus and other competitors are saying the same thing.

Presumably you would trust the lean and mean capitalists who only want to make a buck under a regime of fair competition.

Gary,
I would reiterate that just because the ACCC has served notice on a Corporation, it has not proved its case. As a small businessman, this does not mean I have a fondness for the big end of town. I am aware of their natural, market power. That power may still be in the interests of the consumer(eg Coles and Woolworths or Virgin and Qantas duopolies), although it may have tough consequences for small business in the supply chain. You do have to be aware of this tradeoff. To reduce oligopoly power, would probably raise prices to the consumer, more often than not.