Optus calls for telco competition inquiry

Optus chairman Paul O'Sullivan has called for a major overhaul of telecommunications legislation, including the creation of a new regulator with strong enforcement powers and the ability for customers to quit their existing broadband contracts once they are connected to the NBN.

Paul O'Sullivan.

During the speech at a Trans-Tasman Business Circle lunch in Sydney today, O'Sullivan said the federal government's decision to adopt a multi-technology mix model had inadvertently had an adverse impact on competition.

O’Sullivan said delays in rolling out the NBN meant competing carriers would be reliant on access to Telstra’s existing copper network to deliver DSL broadband services for many years to come.

At the same time, Telstra had been allowed to set and police many of the rules for competitors to access its copper network in the transition to the NBN, he argued.

As a result, O'Sullivan claimed consumers were paying more for broadband than customers in the US, yet were getting smaller usage quotas and longer contract terms.

Competition inquiry

O’Sullivan called on the federal government to immediately establish an inquiry into maximising competition in the fixed broadband market.

Such an inquiry would look at establishing new wholesale standards that meet consumers needs, alongside a new independent referee with the powers to enforce these standards.

Because “Telstra only negotiates when it has a real credible threat”, O’Sullivan said, any inquiry would also need to examine the possibility of Telstra being structurally separated from its copper network.

“Australian taxpayers are already paying compensation to Telstra for this separation,” O’Sullivan said.

“Why should we wait another five years or more, allowing Telstra to further entrench its dominance?”

Contracts should be waived

Another unintended consequence of the MTM model was many customers will now be automatically transitioned to the NBN under existing contracts once the new network becomes available, the Optus chairman argued.

This is in contrast to the original fibre-to-the-premises model, which required customers to go through a process of being connected and disconnected from the network, giving them an opportunity to evaluate other service providers.

“Customers can be pre-conditioned for the switchover by the mail-out of a new modem which they can plug in to their existing socket and this will operate with the new NBN service when remote cutover occurs,” O’Sullivan said.

“Not surprisingly, current providers in these areas are trying to lock down customers into contracts, so when the NBN rolls around many customers will have no other choice but to go with their existing provider.”

O’Sullivan said all customers should be released from their existing contracts once the NBN reached ready for service status in their area.

Customers should also be contacted by NBN during the transition, be presented with a list of providers, and asked to sign a new contract with one of them, he said.

Support from competitive carriers

O’Sullivan’s comments were backed by the Competitive Carriers’ Coalition, which claimed Telstra was aggressively taking advantage of its continuing access network monopoly to leverage further market power and dominance.

“There is no doubt the promise of structural separation, the centrepiece of the NBN, has been eroded as the NBN completion date is extended,” the CCC said.

While Optus has long advocated the structural separation of Telstra, the calls for a break-up had grown more muted in recent years after Telstra agreed to progressively transition its fixed line networks to NBN as the new network is rolled out.