Small telco providers hail industry reforms and the taming of Telstra

Small and medium telecommunications providers have welcomed the new telecommunications regulations announced by Communications Minister Stephen Conroy yesterday, calling it a welcome and historic move.

“It’s absolutely a good thing for small service providers,” says Mynetfone managing Director Andy Fung. “It means open and equal access to all providers. That’s why everyone, other than Telstra, is so welcoming of this announcement.”

“The mood is very upbeat… we are moving into a regime that will be vastly different from the one we are used to.”

The regulations, which will be introduced into Parliament today, require Telstra to split its wholesale and retail sections, effectively ending broadband access discrimination between telecommunications companies.

“It means they’ll get access to the network at more equitable prices,” says ComTel chief operating officer Paul McFadden.

“It’s quite dramatic, given that Telstra are currently extracting 90% of the profit in the industry, which reflects just how much money they’re making as a vertically integrated business.”

“It’s the biggest change since Vodaphone and Optus came onto the market… there is a much brighter future for service providers in terms of growing their market share.”

Competitive Carriers Coalition Executive Director David Forman says “for the first time, providers can compete on a level playing field. They won’t suffer discrimination in prices or in other non-price terms and conditions.”

“Some of the coalition members, at the moment, can take up to a couple of weeks to have a customer connected, which Telstra can do in a couple of days because of their (network) access. The same thing goes for fixing line problems. These types of things annoy customers and have made it much harder for smaller providers to gain and keep their customers.”

“The changes go to the heart of the problem, which is Telstra’s integration and its ability to leverage market power. It’s a mistake that was introduced back in 1991 and has taken 18 years to undo.”

But IBRS telecommunications analyst Guy Creswick says while the move promises vendors a more competitive market, the regulations will not allow Australia to achieve as much competition as overseas telecommunications markets.

“It would appear to be a little more competitive than it has been in the last decade, but we have to bear in mind that Australia only has 21 million people – and some of those are too young to buy phones – so the economies of scale are really quite tight. That’s an important issue that doesn’t make the promises of competition as easy to achieve as in other countries.”

Maddocks law firm telecommunications lawyer Brendan Coady says while Telstra’s attitude to past regulation has forced the Government’s decision, it may enable the telco to emerge as a “more modern company”.

“The way they’ve operated in the past is to be very defensive and put forward the minimum they can get away with to defend their position as an integrated provider to the greatest extent they can.”

“This could be a great opportunity for Telstra to move forward and recreate themselves as a much more in touch and forward thinking company.”