The importance of more regulation

The argument presents itself every now and again that perhaps the government should work with Telstra.

That’s partly a valid argument, I see a positive outcome from working with Telstra, the positives are good, it gets the infrastructure built and in a quick timeframe.

But, theres a lot of disadvantages and negatives to quickly outweigh working with Telstra. (No, they can have a break from being called ‘greedy pigs’, we all know they are now).

The negatives concern competition, and the long term disadvantage competition and consumers would suffer by the government intervening with the dominant supplier in the industry.

Short term goals would be acheived, we would have faster internet access, it’d be expensive, and way overpriced, and not everyone would go onto it, but it’d raise the OECD graph to the 512k speed that is offered as the base product on the Telstra network (pretty pathetic).

Medium term would see that no further investment was continued, simply because competitors would find it expensive, they’d be forced out of the market due to Telstra’s domination, and it would also affect facilities based investment in exchanges, as it would destroy any good reason to invest in exchanges. Limiting market share so that the dominant supplier is the only supplier is all around bad.

Long term, Telstra would be the only supplier of FTTH products, which would effectively kill competition in the industry, down to simple wholesale levels, and therefore allowing Telstra to dictate all prices the market pay for access to broadband services on a fixed network.

The effects of working with Telstra are very damaging. They will hurt the country in many ways.

It is very much better to regulate the dominant supplier to levels that encourage competition, once a level has been reached where competition can survive on its own two feet (so certainly, for Telstra’s own safety as well, review it every 3 – 6 months), dump regulation, and turn it into a free market.

The free market situation we all crave cannot exist safely, while the dominant market supplier exerts so much control over pricing of services and delivery of services.

That control can only ever be controlled by either structural seperation, or regulation. It’s better to regulate now that the sale is done, and if they do a good job on regulating Telstra so competition feel safe, and find it viable to invest, we can then slowly let the tethers loose on Telstra, and give them the ability to compete effectively in the market.

It might suck if you are a shareholder, but regulation has been a fact of Telstra for years now, and until industry invests deeply (which can’t happen without regulation), they are certain to remain to create the free market that Australia needs proceeding further into the future.

A good government will identify this, and create an ultimate goal to work towards this, without obviously excessive detrimental effect to Telstra.

Perhaps the secret to regulation is ensuring Bigpond is being run as a seperate company, and its own advertising and financials stack up to that of a competitive company, maybe that might cause things to become a little more balanced, stopping Telstra spending big dollars on ads for Bigpond (a disadvantage, because other ISPs aren’t able to spend as much on advertising, as excessively).

In any event, working with Telstra has more disadvantages, more negatives surrounding it, and those negatives are so strong, that it very well should stop any government working with Telstra.

Just while I think of it. The Labor plan is costed in such a way that the network Telstra has already has to be used to be built for FTTN.

I doubt Conroy has the future in mind, because working with Telstra will cause a big problem for competition in this country.

My vote is nearly locked in on the Coalition, because I feel many of the policies made have been policies that I can see as logical and agreeable. I can assume that will remain the case in the future. Every party will make mistakes, and will certainly make choices I don’t agree with, but the one I have most agreed with has been Coalition. So, it looks like (but may not be) a Coalition vote.


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