Optus’s O’Sullivan claims Telstra stifling innovation

Optus has warned that Telstra’s stranglehold in the fixed infrastructure space is holding back Australian innovation.

Optus Chairman Paul O'Sullivan has called for an independent inquiry to give Telstra’s rivals a fighting chance. Picture Ross Schultz

Optus has warned that its bigger rival Telstra’s stranglehold in the fixed infrastructure space is holding back Australia’s innovation potential.

The comments from Optus chairman Paul O’Sullivan come as the telco looks to reclaim its spot from TPG Telecom as Telstra’s nearest rival in the market.

Speaking at a trans-Tasman Business Circle lunch in Sydney, Mr O’Sullivan has called for an independent inquiry to give Telstra’s rivals a fighting chance. The focus of the inquiry should be on putting together new wholesale service standards and the establishment of a new specialist enforcer to ensure the telcos were operating by the rules, Mr O’Sullivan said.

He said the timing of the comments was not designed to divert attention from Optus’s current position in the market.

“Absolutely not, we have been working on this policy for the best part of the last five months and we really need to ensure we have a fair go,” he said.

The Australian revealed this week that Optus was reviewing its operations with store closures and job losses expected.

Mr O’Sullivan confirmed a review was under way, but said any decisions around savings would not affect the business.

He also remained tight-lipped on how football fans would be able to watch upcoming English Premier League seasons. The telco last year struck a three-year deal for the exclusive Australian broadcast and digital EPL rights for $189 million.

Mr O’Sullivan said the intended positive impact of the National Broadband Network on competition had failed to materialise and the current state of the NBN only strengthened Telstra’s grip.

“We have worked with the new arrangements put in place under the multi-technology mix NBN, we have reviewed and the comments made today are after giving things a chance,” he said.

On the establishment of a new “specialist enforcer”, Mr O’Sullivan said the role was not designed to weaken the Australian Competition & Consumer Commission’s oversight of the market.

“The challenge we have is that in terms of day-to-day operations there’s a myriad of information (number of lines, fault rates and provisioning capacity) that Telstra has as the operator of the network that nobody else has. That’s quite micro-detail and the ACCC is not designed to deal with that,” he said.

He said if Telstra was unwilling to comply to the new standards the federal government should accelerate its efforts to “implement deeper separation of Telstra’s fixed network”.

A Telstra spokesman said structural separation was under way and subject to some of the strictest wholesale access regulations in the world.

“Customers always have a choice as to who they get their service from and our focus is on providing our customers with a smooth process as they move to the NBN and a great customer experience once they are there — not forcing them into a regulated process that’s not in anyone’s interest,” a Telstra spokesman said.

In an effort to further shake up the retail service landscape, Mr O’Sullivan has called for all consumers to be released from long-term NBN contracts and allowed to pick any broadband provider they want.

Still, industry sources said that the chances of Optus getting its wishes on that front were slim, given the legal minefield involved in unshackling customers locked into bundled offerings from various telcos.

Mr O’Sullivan’s comments again set Optus up against its arch-rival Telstra, which has deployed resources to lock in NBN customers.

“Time has proven that the arrangements that are in place with Telstra are insufficient and will not drive the modern broadband networks that we need to deliver the ideas boom,” he said.