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Wednesday, 9 March 2005
Page: 67

Senator LUNDY (2:29 PM) —My question is addressed to Senator Coonan, the Minister for Communications, Information Technology and the Arts. I refer to the ACCC’s recent decision to withdraw its competition notice and settle its dispute with Telstra over the broadband price squeeze initiated by Telstra in early 2004. Can the minister confirm that the settlement contains no admission of guilt by Telstra and no penalty to deter Telstra from engaging in such practices in the future? Is the minister concerned that after a year of investigation the ACCC decided to accept such an outcome, despite ACCC chairman Graeme Samuel’s view that ‘Telstra’s conduct was likely to have been in breach of section 151AK of the Trade Practices Act 1974’? Finally, does the minister stand by her comments yesterday that the agreement between Telstra and the ACCC proved that the regulatory regime worked effectively?

Senator COONAN (Minister for Communications, Information Technology and the Arts) —I thank Senator Lundy for the question. The situation with the competition notice and how it was proceeded with and settled is a matter of confidentiality between the ACCC and Telstra, and I am not at liberty to say anything other than what is in the public domain. However, my understanding is that, as is often the case with these matters involving the settlement of these kinds of disputes, there is an outcome achieved and one of the bargaining points is that there is no admission as to liability. That saves a great deal of further forensic and other time on the part of the regulator when there may be some issues that are difficult to prove. However, that is supposition on my part. I am simply saying that what is in the public domain is in the public domain.

As to how effectively the competition notice is working, this is the first time that the processes around the competition notice have been tested. Whilst I think it does show that the ACCC has sufficient powers to be able to take an action of the kind involved in a competition notice, and the subject of the competition notice in this particular instance was ADSL broadband pricing, there probably are some lessons to be learned as to whether the process was as efficient as it could be and whether it warrants any changes of a procedural or process nature. It is something I am taking into account, together with other matters that I have under review as to the adequacy of the current regulatory regime. When you look at the current regulatory regime, I think it is very important that these processes work as efficiently as possible, that the regulator has sufficient power and that the process works sufficiently to be able to deal with the kind of anticompetitive conduct that was publicised in the case of the recent competition notice, the parties to it and how it was dealt with.

However, it is only part of looking at the regulatory regime. I must say that I think that the whole competition regime that was put in place in 1997 and amended more recently has served us reasonably well. It has enabled the development of competition and the growth from about three telecommunication providers to about 100. The economy is some $10 billion bigger than it would have been if the competition regime had not been put in place and deregulation had not occurred. However, that is not to say that, as one moves into looking at extraordinary technological change and how it might best serve the nation, it is not appropriate to see whether adjustments need to be made to the regulatory regime. It is appropriate to ask what we might be able to do to enable, for instance, the roll out of new networks. It is true that the existing access regime very much provides for a network that was already in place before competition and access to the network was even thought of. I think some of the challenges relating to competition and the future of telecommunications relate very much to the roll out of new networks and how that should be regulated. Within that context, Senator Lundy, I do stand by my answer that I think it is working reasonably well, but I do think it needs to have some further input coming out of the process. (Time expired)

Senator LUNDY —Mr President, I ask a supplementary question. Notwithstanding the minister’s obviously optimistic outlook, I acknowledge the question she herself raises about the processes involved. So let me ask as my supplementary question: does the minister agree that the settlement makes a mockery of competition law in Australia and amounts to no more than a slap on the wrist for Telstra? Does the government now accept that the current regulatory regime is inadequate to restrain Telstra’s market power, and will the government now give a commitment to strengthen part XIB of the Trade Practices Act to rein in Telstra’s potential to abuse its market power after the disastrous outcome in the broadband case?

Senator COONAN (Minister for Communications, Information Technology and the Arts) —I thank Senator Lundy for the supplementary question. As I said, the situation is that I think it is appropriate to look at the process surrounding the handling of the competition notice. It was the first time that it and the processes around it had been tested, and I have said that I think it is appropriate that we consider it. As to the rest of Senator Lundy’s supplementary question, I certainly do not accept a number of the assumptions that were built into it. Whilst I have heard it said, I think by Senator Conroy, that it amounts to a slap on the wrist or something of that nature, it certainly does not do that. There is a competition regime, and a number of issues to do with the operation of the whole of the competition system in telecommunications need to be reviewed, but I certainly would not accept Senator Lundy’s judgments. (Time expired)