Foreign investment in telco sector to suffer under Opposition broadband plan

Foreign investment in Australia’s telecommunications market will continue to be low if either side of politics do not force the structural separation of Telstra, the director of Telecom New Zealand has told a business forum in Sydney.

Speaking at the SAS Forum in Sydney Telecom NZ director, Rod McGeoch, said the Opposition’s recently announced broadbnad plan to leave the regulatory environment untouched- essentially not structurally separating Telstra’s wholesale and retail arms -was unbelievable.

Talking on the government’s regulatory support and investment incentive structure for the resources sector, McGeoch said the telecommunications industry had suffered an “unbelievable abrogation of the insistence of a policy for access to infrastructure.”

“I was on the board of AAPT when we sold it to Telecom for $2 billion, it is in the books now for just over $400 million,. Why? Becasue the access regime, the government settings in Australia destroyed any other companies opportunity to get a fair go on the Telstra network.”

You have to have the settings right to get the capital to come into the market for investment, he said.

“What we have seen in the telecommunications market is a very poor set of settings, very poor administration of policy, and foreign capital has burnt when we could have had a phenomenal breadth of telecommunication options right across the country. And where that Opposition plan is more troubling is that they are going to leave Telecom [Telstra] as a vertically integrated company as that is how we sold it. Because you simply can’t get fair go across the network if they are also trying to make a quid off it.”

Four of Australia’s biggest Internet service providers (ISPs) ripped into the Federal Opposition’s broadband policy as failing to provide a competitive market structure after the Competitive Carriers Coalition also expressed concerns.

Representatives from Internode, iiNet, iPrimus and Optus added their voice to the growing crowd of experts slamming the Coalition’s alternative to the National Broadband Network (NBN).

In a short but brutal reply to his thoughts on the policy, iPrimus chief executive officer, Ravi Bhatia, came back with two words: “What policy?”

At the business forum today, McGeoch also said he could not understand why 12Mbps was chosen as the “minumum peak speed” for the Opposition’s policy.

“I don’t want to get into the political debate, but I can not believe that we could have settled in the Opposition for 12Mbps,” he said. “Now, I am told on my board for two and a half years that if we want to get video streaming into the house, movies into the house the answer is between 15 and 20Mbps. ADSL by and large can do it but if you want it everywhere its probably fibre. But you have got to have 15 to 20 Mbps, so where did 12 come from? That really troubled me as a goal.”

McGeoch was supported by Bank of Queensland CEO, David Liddy, who acknowledged that while he was not a technical person, the country should not compromise if it wished to compete with other countries and to become a regional financial hub.

“I agree with what Rod is saying. We need to come up with a solution that is going to be a solution, not something that is only going to get us half way there. And it is about speed,” Liddy said.

“I don’t think we can afford to compromise if Australia wants to establish itself as a leading financial centre in this part of the world, we can’t do that if we are backward in our technology.”