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Wednesday, 16 December 1992
Page: 5172


Senator SPINDLER —I refer the Minister for Transport and Communications to Telecom's obligation to provide Optus with grid connections at prices below Telecom's cost. Can the Minister assure the Senate that the Federal Government has not made a decision to sell Telecom or, alternatively, that the Government is not pursuing a strategy of preparing Telecom for such a sale? What measures can be taken to prevent Telecom from sliding into a serious loss position as Optus increases its market share? Is the Minister prepared to take such action to put Telecom on a sound footing to avoid any temptation the Government might feel to put it up for sale, which could mean foreign interests getting yet another foothold in Australia's telecommunications industry?


Senator COLLINS —I can certainly give Senator Spindler those assurances. The Government has absolutely no intention of selling Telecom. It remains committed to the 100 per cent ownership of AOTC. I will provide some little detail, but I have to say that the best way of ensuring that AOTC does not slide into a non-profit situation against the competition from Optus—I know that AOTC is committed to this course—is for AOTC to provide the aggressive, successful, competitive service against Optus that it intends to provide. That will be the best guarantee that it will continue to be the successful company that it now is.

  The Government established AOTC on a firm commercial basis to ensure that it is in a position to provide that kind of competition and to compete on an equal footing with the second telecommunications carrier and in the international telecommunications marketplace. In establishing AOTC the Government decided last year to convert $2 billion in Commonwealth loans to equity over five years. In providing the additional capital, the Government believes that AOTC will become a world class telecommunications carrier capable of delivering services of the best international standard to consumers and providing taxpayers with a commercial rate of return on their investment in AOTC through dividend payments to the Federal Government.

  In the public statement issued in 1991, Mr Beazley indicated that AOTC would not be expected to supply any inter-connection facilities at charges less than cost to them. In addition, the Government has ensured that initial incremental charges for Optus to access the AOTC network have market share triggers to indicate when these charges may be commercially negotiated. We expect that to happen some time next year.

  These principles are set out in the Ministerial (Inter-connection and Related Charging Principles) Determination of November 1991. For example, initial charges for all domestic traffic can be renegotiated once Optus has gained 20 per cent of the total minutes of domestic traffic within Australia. This will ensure that the revenue that AOTC derives from providing inter-connection will increase as the Optus market share increases.

  As stated, the Government has no intention of selling AOTC and in fact has done all that it can to ensure that the company is well positioned to be fully competitive in the marketplace.