CeBIT09: Telstra still a regulatory threat, say iiNet and Optus

In an address to the Access conference at CeBIT today, Malone outlined a number of concerns the ISP has with the ongoing NBN process.

One of his principal concerns is that Senator Conroy will delay the development of a telecommunications policy framework designed to break Telstra's grip over the sector.

He described in detail ways he believed Telstra had stifled competition and infrastructure investment over a number of years, and warned that the problems could still resurface if core policy issues remain unaddressed.

"We now have two new people running Telstra and they appear to be speaking all the right words, but having two nice people in charge doesn't change the fact they still have complete dominance of the Telco industry," Malone said.

"They could still go and put two nasty people back in charge [in the future]. The real worry is that the Government puts its policy development on the backburner because it's not so urgent now that there is more benign leadership at Telstra."

Malone's calls were backed by the director of government and corporate affairs at Optus, Maha Krishnapillai, who called on the Government to push through an appropriate regulatory framework before Christmas.

"A change of CEO and chair does not change the incentive for Telstra to behave in a certain way and doesn't change anything on the potential for market power [abuse]," Krishnapillai said.

"If we don't get regulatory reform decisions right we'll be heading into the NBN world in an untenable position. Changes really need to be driven through legislation in the Senate."

Malone said Telstra Wholesale pricing continues to stifle competitor investment in DSLAMs.

"iiNet needs 170 people on an exchange in metro Australia to justify putting in our own DSLAM, yet we have 2000 customers on the Geraldton [WA] exchange alone but find it difficult to get a return," Malone said.

"Since Telstra turned up the price of backhaul it's been uneconomic [to roll out a DSLAM there]. The price from Geraldton to Perth is 100 times that from Parramatta [known as Sydney‘s second CBD] to Sydney.

"Metro equivalent pricing for regional backhaul is critical. If it's delivered in the next 12 months [through the Backhaul Blackspot scheme] we'll be able to enable exchanges in WA and also right along the Eastern seaboard."

Malone also expressed concerns that the Government may legislate against competing internet technologies to increase short-term take-up of NBN services.

He used the example of iiNet still having a large proportion of customers on dial-up connections as an example of the challenge faced by the Federal Government.