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ACCC dysfunctional: Telstra

ACCC dysfunctional: Telstra

TELSTRA’S SPIN doctor has launched a public and vitriolic campaign against the Australian Competition and Consumer Commission (ACCC), calling the regulator outdated and accusing it of stunting…

TELSTRA’S SPIN doctor has launched a public and vitriolic campaign against the Australian Competition and Consumer Commission (ACCC), calling the regulator outdated and accusing it of stunting investment.

Phil Burgess, the telco’s group managing director for communications and public policy, launched a $1 million publicity campaign in Melbourne last week attacking the regulation of broadband infrastructure.

The campaign comes as Telstra begins legal proceedings in the High Court challenging the amount the ACCC will allow Telstra to charge competitors to use its broadband network.

Burgess told Lawyers Weekly that the court case was less about regulation and more about protecting shareholders’ interests.

“The issue is on the right of individuals, in this case shareholders, not to have their wealth pillaged by public authorities without just compensation. You know if you want to take my property, like Darryl Kerrigan said in The Castle, if you want to take my property, fine but pay me what it’s worth,” he said.

Burgess accused the regulator of attempting to pick the pockets of Telstra shareholders and has promised that Telstra will produce maintenance receipts totalling hundreds of millions of dollars in a bid to prove that the Government’s regulations are allowing its rivals to exploit Telstra’s network.

“What regulators ought to be doing is protecting the public interest and creating an environment that is conducive to wealth creation and they’re not protecting the public interest when they reduce choices to consumers. They’re not protecting the public interest when they stunt investment. They’re not protecting the public interest when they pillage the back pockets of shareholders and take private money for public purposes without just compensation,” he said.

Telstra hopes the campaign will drum up enough public support to pressure the Government to abolish the regulations that only apply to Telstra, something Burgess said stems from an outdated “addiction” to regulation in Australia.

“I mean, the regulator here is trying to preserve a worn out, backward-looking, dysfunctional regulatory regime and so a worn out, backward-looking, dysfunctional regulatory regime is the reason why Australia is stuck in the bottom half of the OECD broadband penetration,” he said.

However, Professor Michael Adams, head of the School of Law at the University of Western Sydney, said Burgess’s statements failed to acknowledge the legislative framework governing the ACCC.

“Regulators have shortcomings but his statements are extreme. A regulator can only work within the confines of legislation. If the Trade Practices Act (TPA) is genuinely restricting competition then Parliament has to be the one to change the law — a regulator can’t just say, “OK, let’s invent a new way of doing things’,” he said.

Adams believes it is a matter for the Productivity Commission to investigate.

Michael Bradley, managing partner of Gadens in Sydney agrees that the ACCC is restricted by legislation, but said it often took an unrealistic view of the telecommunications market and how Telstra should conduct itself.

“It’s literally true that it’s bound to act within confines of legislation and it can’t go outside of those powers, but when you are talking about market regulation it’s not just a legal framework.

“It is a very subjective field so reasonable minds can differ very widely over market and competition issues. Certainly there’s a widely held perception among some parts of the business community that the ACCC has a blinkered and fairly naive view of business and how the markets really operate, and I think there is some merit in that view,” he said.

While Bradley didn’t advocate reform of the TPA, he noted that the difficulty facing the ACCC is how it manages conflicting interests.

“The Trade Practices Act is a popular tool for political manipulation — it’s a very powerful weapon and it’s been pulled in all directions I guess to suit the interests of big business, small business, consumers, and as an instrument of government policy, and the ACCC is in the middle trying to strike the right balance. So everyone has an opinion about how the Trade Practices Act could be improved,” he said.

The outcome of the High Court case will certainly have an impact on how the ACCC deals with these conflicts in future.

“If the ACCC succeeds they will be emboldened, I imagine, to pursue similar actions. This fight has been going on for a very long time in various guises and this is a pretty significant chapter in that saga, so if there is a definitive result either way it will have quite an influential impact,” Bradley says.

ACCC chairman Graeme Samuel declined to comment due to the court proceedings.

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