Chorus manager of marketing strategy and insight Rosalie Nelson warned Australia’s telecommunications industry on the risks of New Zealand-style full structural separation. She was speaking at the CommsDay Melbourne Congress and her presentation was reported in Communications Day.
Nelson’s comments came at the time Optus chairman Paul O’Sullivan called for Australia’s Telstra to split along similar lines to Telecom NZ (now Spark) and Chorus.
When Chorus demerged from Telecom NZ, it inherited the copper telephone network, a considerable share of the former company’s debt and almost all the regulatory obligations.
Nelson says the Commerce Commission ruling on the price Chorus can charge telcos and ISPs to use the copper has hurt its ability to pay for the fibre network.
Structural separation doesn’t fix everything
While the arguments are well-known, what isn’t widely understood is how dependent Chorus is on revenue from the copper network and how it doesn’t get to set the prices for copper services.
She says that for every dollar the government puts into the UFB build, Chorus puts in two. For every dollar Chorus earns it needs 60 cents of capital expenditure.
Nelson says the assumption telecommunications is like other utilities needs questioning because it is subject to rapid change. That leads to uncertainty — yet investors are usually drawn to utilities because of their stability and relative certainty.
She warns Australian telcos to make sure all their funding sources are secure before taking part in an industry restructure.