The New Zealand double standard

Contradictions and hypocrisy from Telstra

Sydney, 11 September 2007 – In a confusing web of contradictions Telstra has continued to argue for competition in New Zealand, and against it in Australia. As the incumbent provider in New Zealand, Telecom NZ holds all the cards that Telstra holds in Australia. It seems Telstra has a very different idea of incumbents’ responsibilities when they are turned.

In June this year Telecom NZ announced a $300 million mobile network investment plan to upgrade to its existing CDMA network with a new Wideband CDMA (WCDMA) network. In August TelstraClear, Telstra’s New Zealand arm, struck a deal to gain access to the new Telecom NZ network, called roaming. TelstraClear argued it should have access to the new network because it could access the old, and that competitive access would be good for innovation and consumers.

This has a striking similarity to the argument Telstra competitors have put forward in Australia to gain access to the NextG network, with no success.

Telstra has refused to meaningfully discuss wholesale access or roaming to its NextG network, despite the fact that once its CDMA network is switched off in 2008, competitors who paid for access to that network will be left stranded. This means Telstra will have a monopoly on wireless broadband services to regional areas, and customers of competitors who can no longer provide those services will have no choice but to switch to Telstra.

“It is unacceptable for Telstra to argue for competitor access in New Zealand, and not provide the same courtesy to competitors in Australia,” said a T4 spokesperson.

“And to argue this under the guise of benefits for innovation and consumers is equally as unacceptable. If Telstra cared about consumers it would not employ this self-serving double standard.”

“The other aspect is that Telstra has always argued against “foreign competitors” having a stake in Australia’s telecommunications future. Yet it demands to be involved in every aspect of New Zealand telecommunications. It just doesn’t add up – both arguments can’t be true,” he said.

The hypocrisy extends beyond wireless to fixed line services

Telstra has consistently complained in Australia it is forced to provide competitors access to its network at below cost. Yet the formula used by the Australian Competition and Consumer Commission (ACCC) to calculate this cost is the same as what Telstra argues should be used in New Zealand to decide how much TelstraClear should pay to access the Telecom NZ network.

For example, the ACCC has ruled the fair price Telstra can charge competitors in Australia for Line Sharing Service (LSS) is $2.50 per month, not the $9 per month Telstra has historically charged. Line rental has increased by 134 per cent since 2000, and the ACCC has several times rejected Telstra attempts to increase access prices even more. According to the ACCC, “Telstra's proposed pricing would significantly disadvantage facilities based access seekers…The ACCC is not satisfied that Telstra's proposed charges are based on reasonable estimates of efficient costs.” [1]

Yet in NZ, TelstraClear argues that “Telecom should pay the same charge for network use as its competitors and receive equivalent network performance and service levels."[2]

“This is yet another self-serving double standard. Telstra argues for stronger competition in New Zealand, saying that the regulator should choose the lowest price, yet it battles with the ACCC in Australia to overcharge competitors,” said a T4 spokesperson. 

Telecom New Zealand recently announced that competitors will not have access to local loops in New Zealand until late 2008, which TelstraClear called “a two-finger salute to the Government and customers who are tired of waiting for a choice of telecommunications provider.”[3]

TelstraClear went on to say the decision showed Telecom had no intention of working to make competition a reality. Again, a strikingly similar argument to that put forward by Telstra competitors in Australia.

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About “Tell the Truth Telstra” (T4) - http://www.tellthetruthtelstra.com/.au

The Tell the Truth Telstra (T4) campaign was launched in April 2007, to counter Telstra’s campaign of misinformation on telecommunications and broadband competition and regulation in Australia.

Tell the Truth Telstra (T4) is an initiative of Australia’s leading telecommunications carriers and Internet Service Providers (ISPs) including AAPT, Adam Internet, Austar, iiNet, Internode, Macquarie Telecom, Powertel, Primus Telecom, Telarus, TransACT, WestNet and Unwired.

The Tell the Truth Telstra (T4)initiative commenced with a united complaint to the Australian Competition and Consumer Commission (ACCC) asking it to investigate whether Telstra’s conduct amounts to misleading and deceptive conduct.

The Tell the Truth Telstra (T4) initiative documents a list of Telstra’s myths and highlights their misleading nature.  An accompanying education program includes an information kit for MPs, a public Web site (http://www.tellthetruthtelstra.com/.au), and a series of information sessions for MPs, exposing the truth behind Telstra’s attempt to gain relief from regulation.

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