Chapter 4
Regulatory Measures Enhancing Competition
and Controlling Foreign Ownership
Term of Reference (h) :
(h) whether the privatisation of Telstra confers an unfair competitive
advantage to it, in detriment to open competition and the involvement
of other telecommunications companies and the implications of foreign
ownership on these matters.
Introduction
4.1 In developing the Telecommunications Act 1997, the government
aimed at creating an environment conducive to competition in telecommunications.
The current Bill is framed in such a way as not to impede the achievement
of this goal. It is premised on the fact that telecommunications is an
essential public utility and regulation of the industry is essential for
public interest reasons.
4.2 Most expert witnesses had no objection in principle to the sale providing
the regulatory scheme was adequate to protect the public interest
in promoting competition. These witnesses included both consumer groups
and Telstra's competitors:
AAPT has no particular difficulty [with privatisation] providing we are
able to get these additional safeguards… [1]
There has to be a very strong competitive safeguard regime put in place,
and it is not there at the moment… but in principle we [Macquarie
Telecommunications] have no objection whatsoever. [2]
Our opposition is similar to my colleagues here. Privatisation is a world-wide
trend. For Telstra to survive in a global market - telecommunications
of all markets is global instantly - Telstra has to have the ability to
compete with global players that are entering this market… [3]
(Global One Communications)
Ownership, to us, is secondary to the competitive environment and consumer
protection rights in place in the marketplace. Our questions, therefore,
are about the extent to which we are fully certain that current arrangements
will deliver a competitive marketplace and safeguards for the long-term
interests of consumers… [4] (Australian
Consumers' Association)
Ownership of Telstra is not the relevant issue. What is most relevant
is the quality and price of service and the degree of competition provided
by the Telecommunications companies. [5] (National
Farmers' Federation)
4.3 In his second reading speech, the Minister made it clear that the
government's aim was to deliver better telecommunications services through
a competitive market that is properly regulated in the public interest.
The government, like the majority of witnesses before the Committee, saw
government ownership as irrelevant to this aim.
Ownership of a telephone company is not a substitute for a comprehensive
and transparent legislative framework which clearly establishes rights
and obligations… For pro-competitive countries like the United States,
Great Britain, Canada and New Zealand private ownership coupled with robust
government-imposed consumer and competition safeguards are the norm…
[6]
4.4 A number of key witnesses at the inquiry differed in their opinions
on whether the current regulatory scheme is adequate to ensure
competition. Not surprisingly, Telstra's competitors raised concerns about
claimed shortcomings of the present regulatory scheme. They wished to
see it strengthened before the sale, pointing to the need for certainty
for investors and the possible political difficulty of increasing regulation
after the sale. [7] For example:
We think that informal processes and checks that currently exist because
of the nature of public ownership would disappear… Part of the problem
is that it will be very difficult to implement this after privatisation
precisely for some of the reasons that Mr Hutchinson [Office of Asset
Sales and Information Technology Outsourcing] was referring to about the
certainty of the prospectus and the interests of shareholders who have
made investment choices under one set of assumptions about regulatory
change. [8]
4.5 In arguing for tighter standards before privatisation, consumer groups
and Telstra's competitors relied on the proposition that the government
as owner, if it comes under political pressure from the electorate, can
somehow moderate any unpopular behaviour by Telstra outside the formal
regulatory scheme, thereby compensating for the claimed weaknesses of
the regulatory scheme; but a private owner would be less likely to react
to such pressure. This proposition contains an assumption that Telstra
wields monopolistic power to some degree and can therefore afford to neglect
quality of service. Witnesses for Telstra, on the other hand, stressed
that they must act on the wishes of the public as customers no less than
governments must act on the wishes of the public as electors. [9]
Adequacy of the existing regulatory scheme to promote competition
The status quo
4.6 The Trade Practices Act 1974 contains most of the relevant
law against anti-competitive conduct. There are general provisions against
restrictive trade practices provisions in Part IV of the Act and more
detailed provisions relating to telecommunications in Parts XIB and XIC.
4.7 Part XIB of the Trade Practices Act 1974 increases the ability
of the Australian Competition and Consumer Commission (ACCC) to respond
where there is evidence of anti-competitive conduct, particularly (though
not limited to) predatory pricing behaviour: for example, by making record-keeping
rules, by ordering companies to supply details of their tariffs, or by
issuing a `competition notice' - that is, a finding of anti-competitive
conduct which becomes prima facie evidence of the conduct in any
court action to recover damages arising from the conduct.
4.8 Part XIC establishes an industry-specific regime for regulated access
to carriage services. The Part enables carriage services and services
which facilitate the supply of carriage services to be declared by the
ACCC. The consequence of declaration is that carriers and carriage service
providers supplying declared services are, unless otherwise exempt, obliged
to supply the declared services and specified ancillary services to requesting
service providers. Where the parties cannot agree on the terms of access
the ACCC may arbitrate.
4.9 The Telecommunications Act 1997 creates the Australian Communications
Authority (ACA) as the telecommunications and radiocommunications regulator.
As well as imposing important obligations on telecommunications service
providers intended to benefit customers, as discussed in the previous
chapter, the Act imposes several obligations of a technical character
intended to promote competition (providing for the pre-selection of a
particular carrier or service provider, requiring calling line identification
and access rights for carriers to facilities and network information).
4.10 The Telstra Corporation Act 1991 gives the Minister powers
to regulate the charges set by Telstra for its services. Under Part 3
of the Act the Minister has a general power to give directions to Telstra
in the public interest.
4.11 The new telecommunications arrangements emphasise industry self-regulation,
however there are safeguard provisions that enable the appropriate regulator
to intervene and establish standards or arbitrate an outcome.
Is Telstra a natural monopoly?
4.12 There was some argument in evidence over whether Telstra's business,
or parts of it, is a `natural monopoly.' In considering this, it is important
to note that `natural monopoly' is not the same as `market dominance'.
`Natural monopoly' is a well-recognised form of market failure in which,
because of increasing returns to scale among producers, a market will
tend to fall into the hands of one producer, who can then exploit that
position to increase prices. [10] `Market dominance'
is a static situation, which may be caused by the forces of natural
monopoly, but may also be caused by other things such as historical inertia,
the advantages of incumbency, or superior performance in competition.
4.13 For historical reasons an incumbent may have the lion's share of
the market, yet if that share is being whittled away by competitors, however
gradually, and if this is a stable trend having regard to the structure
of the market, there is no natural monopoly. The dominance of the incumbent
suggests regulation is needed to break down barriers to entry by competitors;
natural monopoly suggests additional regulation is needed, either to prevent
it from arising (for example, right of access by competitors to Telstra's
network), or to prevent it leading to exploitation of customers (for example,
price controls).
4.14 Witnesses who called for a strengthening of the regulatory scheme
raised the question of `natural monopoly' as part of an argument that
a fully private Telstra, wielding dominant market power, will be more
aggressive in exploiting its advantages, to the detriment of competition.
4.15 Is Telstra's business (or parts of it) a natural monopoly, or does
it have market dominance? The answer may be different in different parts
of the business:
It is different in different markets… If you take the local core
market, it is 99 [per cent to Telstra]… In the long distance market
we [Optus] have about 20 per cent; and in the mobile market I think it
is 46 per cent to Telstra, 36 per cent to us and the rest to Vodaphone…
[11]
4.16 A 1997 estimate of market share is: [12]
| 1997FY (millions) |
Telstra |
Optus |
other |
total |
| local calls |
10,800 |
n/a |
0 |
10,800 |
| STD (minutes) |
10,300 |
2,000 |
0 |
12,300 |
| IDD outgoing (minutes) |
700 |
250 |
0 |
950 |
| IDD incoming (minutes) |
755 |
180 |
0 |
935 |
| Mobile |
2,400 |
1,300 |
300 |
4,000 |
4.17 Certainly Telstra is 99 per cent dominant in the local loop but
- and this is the test of natural monopoly - how vulnerable is that dominance
to competition (by wireless technology, for example)? Opinions varied
from `some competition in the not-too-distant future [by wireless technology]'
[13] to `no technology on the horizon that
gives you one tenth the reliability or bandwidth of a twisted pair [of
copper wires]' [14]. Telstra's view was that:
Overseas experience also suggests that competition comes from technological
change and innovation, not solely driven by regulatory arrangements. Armstrong,
Cowan and Vickers have argued that technological developments have reduced
the scope of natural monopoly in industries such as telecommunications.
[15]
4.18 The Department of Communications and the Arts was optimistic that
a competitive market was being established:
Recent evidence suggests that the steady erosion of Telstra's market
share in key sectors is continuing in the open competitive market. Telstra's
half yearly results to 31 December 1997 (released in February 1998) note
that its market share in long distance (domestic and international) services
has declined, although market growth as a whole has meant its revenue
remained flat. In the mobile services market, Telstra's market share in
December 1997 was estimated to be 57.8 per cent, down from 60.0 per cent
in June 1997, and forecasted to decline to 55.5 per cent by June 1998
(source: market analyst reports). [16]
4.19 Telstra's competitors raised various concerns about alleged anti-competitive
behaviour on the part of Telstra. They expressed fears of reduced competition
if pro-competitive controls are not strengthened. It was often unclear
whether the witnesses thought that problems were allowed to persist by
insufficient power in the Australian Competition and Consumer Commission
(ACCC) and the Australian Communications Authority (ACA), or by insufficient
energy and diligence on the part of the authorities in exercising what
power they have. Suggested changes (discussed just below) involve increasing
the authorities' powers; but some witnesses were also unhappy with their
performance:
On balance I would say that firstly Austel was probably more proactive
than the ACCC - and I do not think that is probably even arguable - and
secondly it had more powers, greater powers of direction. [17]
We have been disappointed so far with the approach of the Australian
Communications Authority in using the powers it does have to regulate
the industry…we believe it is necessary for the industry to receive
some very strong signals early on that these agreements about the ways
in which new products and services will be introduced, or, indeed, the
way existing services are delivered must actually be honoured and not
just agreed to on paper. [18]
4.20 However, those witnesses recognised that Austel “had rather
different powers” and also that Austel had “some pretty experienced
staff who unfortunately did not transfer to the ACCC”. [19]
4.21 The ACCC, though not asked to reply specifically to claims of inaction,
commented on the complexity of the issues:
When you are investigating complex matters with a number of industry
complainants, this is not a recipe for rapid intervention. The Commission
believes that competition policy investigations will normally be measured
in terms of months rather than weeks. [20]
Price of access to Telstra's network
4.22 Telstra's competitors have a right to access declared parts of Telstra's
network, subject to arbitration by the ACCC, if agreement on terms cannot
be reached. [21] Given Telstra's dominance
as owner of local network infrastructure, this is a key provision to prevent
the behaviour of a natural monopolist. Concerns expressed in evidence
were:
- There is inadequate access to information about Telstra's costs of
providing access. This results in Australian interconnection charges
being three times higher than in the UK, although the regulatory pricing
principles are broadly similar in both countries. [22]
- Cost price is difficult to ascertain, given Telstra's vertical integration:
- The cost structure and the way Telstra passes costs within its
own vertically integrated business is very important to competition.
Unless Telstra is forced to provide us with the same pricing as
it uses within its own organisation in passing from one level of
its vertically integrated business to another, then I do not see
how we are ever going to be able to get fair competition in this
country… The ACCC now has a working group running and they
are trying to get to the bottom of this… but they will never
really know because there are too many unknowns in the cross-subsidies
and in the way that Telstra manages its business. [23]
- Arbitration by the ACCC on access is a long-drawn out process, the
delay being generally to Telstra's advantage. It was suggested that
the ACCC should be able to order interim access pending arbitration:
Currently access seekers cannot get access to Telstra's network elements
(other than simple voice services) at other than retail prices, despite
clear provision in the legislation for Telstra to supply declared services
at cost-based prices. [24]
4.23 Witnesses pointed to the contrast between long-distance charges
(which have become cheaper) and local call charges (which have not) as
evidence of Telstra's alleged monopolistic behaviour arising from bottleneck
control of the local loop. [25]
I have a view which is educated guessing based on what we know of overseas
costs, and that is the real cost of Telstra's [local] telephone calls
is probably in the 10c to 12c vicinity; so I think there is a 100 per
cent mark-up. [26]
4.24 Telstra, on the other hand, referred to local access lines as `less
profitable', [27] and commented that `for 25
cents, the local call area provides untimed call access to some of the
largest call zones in the world'. [28]
4.25 The issue here is not what the true figures are, but the uncertainty
about what they are. Telstra's competitors recommended that cost-based
pricing of access to Telstra's network should be mandatory. [29]
They argued that Telstra should be `ring-fenced' (that is, forced to account
for its various business units separately) to make internal transfer prices
more obvious. `Ring-fencing' was put forward as a feasible alternative
to complete structural separation (which was acknowledged to be not politically
feasible). It may include various other measures to achieve the same purpose
- for example, prohibiting employees from working for more than one business
unit of the vertically integrated company, or prohibiting exchange of
certain information between business units.
4.26 On the proposal that the ACCC should have the discretion to make
public the costs of bottleneck facilities (which would be part of a ring-fencing
scheme), the ACCC commented that it would find that a useful power to
have:
I think, by and large, yes. I would have some small reservations about
it. But it seems that is essentially what happens in the UK where BT costs
of bottleneck facilities are published. It does not seem to have caused
any harm to BT or to investment in that regime. [30]
4.27 The ACCC's representative before the Committee felt that it was
not totally clear whether the Commission already has some of these powers:
It is not totally clear that we do not have some of these powers in our
power to make record keeping rules. I think what Optus is proposing [certain
amendments to the bill] would make the position clearer. As I understood
it, they were also adding another feature, and that was a suggestion that
we be able to, as it were, direct the behaviour within Telstra of how
the different areas communicate with each other. So, if you had ring fencing
between, say, wholesale and retail businesses, it would not just be accounting
ring fencing; it would include how those areas interacted with each other.
I can see the arguments for that. [31]
Price discrimination
4.28 Competitors claimed that Telstra's vertical integration and uncertain
cost structure allows other anti-competitive behaviour. According to AAPT
Telecommunications:
…Telstra is well-placed to use cross-subsidisation, price discrimination
and `bundling' of its offerings to form special pricing packages…
apart from stifling the development of effective competition, such pricing
practices may well result in customers in market segments where there
is little competition (for example, residential and rural customers) cross-subsidising
aggressive pricing by the incumbent in segments in which there is more
robust competition…
4.29 AAPT recommended mandatory filing and publication of all Telstra's
tariffs as a disincentive to this behaviour. [32]
Confidentiality of access agreements
4.30 Telstra's competitors complained that Telstra, by demanding confidentiality
for access agreements, is able to play its competitors off against each
other unfairly. Macquarie Corporate Telecommunications stated:
Before Telstra would commence negotiations, it required Macquarie to
sign a Confidentiality Agreement which has the effect of stymieing Macquarie's
ability to complain to the ACCC under Part XIB [of the Trade Practices
Act 1974] or to use the access regime in Part XIC, by preventing Macquarie
from divulging to the Commission what occurs during the negotiations or
providing the Commission with any documents exchanged or created during
the negotiations. [33]
4.31 AAPT called for all Telstra's access agreements to be published
as long as Telstra enjoys substantial power in the relevant markets. `This
is the situation existing in some other countries, such as New Zealand,
where the publications of all interconnection agreements is mandatory'.
[34] The Committee notes that such transparency
was also advocated by telecommunications consumers' groups as a means
of encouraging better performance standards and competitive pricing, which
would benefit consumers.
Right of action under Part XIB of the Trade Practices Act 1974
4.32 At present Part XIB of the Trade Practices Act creates no
private right to seek injunctive relief for contravention of the competition
rule unless a competition notice has been issued by the ACCC. Telstra's
competitors say that this is unfairly restrictive, and that affected parties
should be able to act independently - for example, in cases where the
ACCC does not wish to:
Budgetary constraints may be one reason why the Commission may be unwilling
to commence proceedings. Other reasons may include excessive cautiousness
by the regulator in interpreting the provisions of the Act. [35]
Telstra's position
4.33 In evidence to the Committee, Telstra argued that the regulatory
authorities' powers are sufficient to promote a competitive environment:
We think that some loose comments of late about us being lightly regulated
are grossly in error….
The range of both competitive and consumer safeguards in this country
is quite immense. The Trade Practices Act, as amended last year, the Telecommunications
and the Telstra Corporation Act all provide a litany of competitive safeguards
in terms of self-regulatory objectives and mechanisms. They also provide
very broad powers that are administered firstly by the ACCC, particularly
in terms of competition safeguards; secondly by the ACA in terms of consumer
safeguards and technical and operational standards; and thirdly by the
TIO who is the industry specific regulator for individual consumer cases….
[36]
4.34 The Committee notes that although the ACCC has conducted a number
of extremely lengthy investigations into Telstra's conduct under Part
XIB of the Trades practices Act 1974, none of them have resulted in the
issuance of a Competition Notice. Telstra comments:
…quite perversely, I think, there is a sense that this regime is
not working unless the ACCC find Telstra guilty of anti-competitive conduct
or are called on to arbitrate access disputes. We as a company take very
seriously the legislation that we are working to. We, too, were a party
in contributing to it, and we say the very fact that the ACCC has not
issued a competition notice comes back to the fact that we take seriously
our obligations. [37]
Comment
4.35 The Committee acknowledges the widespread view among both user groups
and Telstra's competitors that, because of Telstra's market dominance,
the present regulatory scheme may need fine-tuning to ensure the best
competitive outcomes. The Committee is also mindful of the need not to
multiply bureaucratic tasks unnecessarily. The question is not whether
telecommunications companies are lightly or heavily regulated in a descriptive
sense, but whether they are appropriately regulated to secure the
desired outcomes for the consumer.
4.36 On balance the Committee is inclined to accept some of the suggested
changes. The following recommendations are built on the existing regulatory
scheme, which the Committee regards as fundamentally sound. They focus
on ensuring that the regulatory authorities have all the powers that may
be needed, rather than the detail of how they might exercise those powers.
Recommendation 5
The Committee recommends that the Australian Competition and Consumer
Commission's (ACCC) powers in relation to record-keeping rules be amended
or clarified as necessary to ensure that the costs associated with Telstra's
internal transfer prices are made known in the context of negotiations
over cost-based pricing of access to telecommunications infrastructure.
Recommendation 6
The Committee recommends that the Australian Competition and Consumer
Commission (ACCC) be empowered to direct the publication of information
kept in accordance with the record-keeping rules.
Recommendation 7
The Committee recommends that parties adversely affected by anti-competitive
conduct should be able to take action against it under Part XIB of the
Trade Practices Act 1974, whether or not the Australian
Competition and Consumer Commission (ACCC) has issued a competition notice.
Conclusion
4.37 The Committee is satisfied that the regulatory mechanisms provided
through the ACA and the ACCC are fundamentally sound. It has made its
recommendations for the sake of greater certainty and in response to the
concerns put to it by witnesses to this inquiry. The Committee believes
that its recommendations for strengthening the regulatory regime will
enhance competitiveness in the telecommunications market and will ensure
that the public interest is better served.
Foreign Ownership Controls
4.38 In the evidence submitted to the Committee there was little concern
expressed with having a level of foreign ownership of Telstra. The main
concerns related to the ability to maintain the current foreign ownership
restrictions in the future.
Current Arrangements
4.39 The Telstra Corporation Act 1991 gives effect to the Government's
policy for regulating the level of foreign ownership of Telstra. Under
section 8BG of the Act unacceptable foreign ownership exists in relation
to Telstra if there is a group of foreign persons who hold, in total,
a particular type of stake in Telstra of more than 11.6667%, or an individual
foreign person holds a stake of more than 1.6667%. These percentages equate
(with rounding of 4 decimal places) to a total foreign ownership restriction
of 35% of one third, and an individual foreign ownership restriction of
5% of one third.
Proposed New Arrangements
4.40 The Bill effectively retains the foreign ownership requirements
contained in the Telstra Corporation Act 1991, but reformulates
the calculation of the foreign ownership limits to cater for the sale
of the remaining 66% of the Commonwealth's equity:
- aggregate foreign ownership is restricted to 35% of total equity not
held by the Commonwealth;
- individual foreign ownership is restricted to 5% of the total equity
not held by the Commonwealth.
Discussion of Issues
4.41 There was general support for the current restrictions on foreign
ownership to be maintained. Evidence was also presented that Australians
wish to continue to own Telstra:
While the legislation allows up to 35 per cent, that is a natural limit,
I think it is the natural inclination of Australians to own this company.
As Robert Lipman said, `It is the subject of strong investment advice
that retail investors invest in this company.' We would expect that the
Australian demand for any subsequent tranches of Telstra would be similarly
strong. I think the prospect of this being `owned or controlled by foreigners'
is an extremely unlikely outcome. [38]
The Australian Telecommunications Industry Association considered that:
In regard to ownership issues, the ATIA fully supports the approach foreshadowed
by the Government that Telstra remain majority Australian owned and controlled.
This approach will provide the policy thrust to ensure Telstra is more
responsive to market signals and better able to compete whilst ensuring
that this most important strategic industry remains in Australian hands.
[39]
4.42 Several witnesses espoused the benefits of foreign ownership. For
example, Telstra considers that international investment provides access
to global resources that might otherwise be denied the company:
Global competition is shaping the direction of the Australian communications
market. Of the 15 licensed carriers operating in the Australian market,
the top five have significant foreign based shareholders that provide
access to global resources. Telstra needs to be able to compete on similar
terms and to be able to partner with other private sector companies companies
that expect clear commercial objectives and apolitical actions. [40]
4.43 Some support was expressed for foreign ownership in order to put
an additional discipline upon Telstra's performance:
The discipline they bring is one that says, `We don't need to own Telstra,
and we will not continue to own Telstra if it performs poorly relative
to its international peers, because we can happily own France Telecom
or Deutsche Telecom.' So having a spread of investments is one aspect,
but having good performing telco investments is the other. That is part
of the scrutiny, if you like, part of the discipline, that the international
investor market brings to the table. [41]
4.44 Some argued as well in favour of the flexibility of raising the
necessary capital, when the need arises:
Nevertheless, a fully privatised structure offers more flexible mechanisms
to raise the necessary capital and to compete with these global companies
on similar terms in the Australian and international markets. [42]
4.45 In regard to the issue of Australian control, the Office
of Asset Sales and Information Technology Outsourcing considers the current
provisions to be sufficient:
It has been argued that overseas entities could band together and purchase
5% blocks of shares in order to make changes to the way Telstra is operated.
This would clearly contravene the legislation because of the broad associate
provisions. [43]
4.46 There was some concern expressed about the possible removal of the
current ownership restrictions in the future. For example, Ord Minnett
argued:
Over time there is nothing to stop the capital flows changing. I would
certainly say that, as regards any subsequent offer of shares, we would
expect Australian demand to be so strong that the overseas component will
be well short of 35 per cent again. Over time, in theory, but it would
be a considerably long time, that percentage could build up. [44]
4.47 The Communications and Electrical Plumbing Union considers that
there will be problems in maintaining these foreign ownership limits due
to Australia's size in the global economy, and the administrative burden
of foreign ownership restrictions:
As a small economy, dependent on the goodwill of more powerful trading
partners, Australia is not well placed to resist these pressures. Protection
of the foreign ownership limits, once Telstra is fully privatised, will
also be administratively cumbersome. The Union believes that the simplest
and most effective means of ensuring majority Australian equity in Telstra
is to retain it in majority public ownership. [45]
4.48 In this regard, however, the Committee noted evidence from Telstra
that the company is able to effectively monitor its overseas shareholdings:
We have quite a detailed mechanism, but we have never been close to those
levels because we are several percentage points below the cap that is
allowed under the legislation. [46]
4.49 A more specific concern expressed in several submissions was the
ability of the government to maintain foreign ownership restrictions under
the Multilateral Agreement on Investment:
The Multilateral Agreement on Investment, should Australia become a signatory
to it, may make the current limits on the foreign ownership of Telstra
illegal. [47]
A less alarmist comment was made by a Communications and Electrical Plumbing
Union witness at the Melbourne public hearing:
It is early days. Until we see what is actually signed and the way the
Australian government and other governments handle commitments under the
MAI we cannot be certain of an outcome. But, certainly, the potential
is there in that agreement, and in similar sorts of agreements to erode,
we would suggest, any kind of restrictions that a national government
might put on foreign ownership levels. [48]
Conclusion
4.50 The Committee agreed that it was undesirable to have Australia's
national telecommunications carriers under foreign control and recognized
the need to restrict foreign ownership. The Government's policy of having
foreign ownership restrictions on Telstra stricter than those applying
to other industry sectors under the Foreign Acquisitions and Takeovers
Act 1975 was supported on the basis of Telstra's vital continuing
strategic role in the national economy.
4.51 The Committee considered that it is too early to consider the impact
of the Multilateral Agreement on Investment on the foreign investment
restrictions on Telstra. In making this decision the Committee noted that
the Multilateral Agreement on Investment was yet to be finalised; was
yet to be signed by Australia (and the potential may exist to put reservations
on the signing); and the foreign ownership ramifications of this agreement
would also impact upon other sectors of the economy.
4.52 The evidence presented to the Committee was insufficient for the
Committee to determine whether the current and future levels of foreign
ownership (the provisions of the Bill do not allow an increase in foreign
ownership) would confer an unfair competitive advantage on a fully privatised
Telstra.
Footnotes
[1] Transcript of Evidence, p. 92 (Mr Perkins)
[2] Transcript of Evidence, p. 92 (Ms Fox)
[3] Transcript of Evidence, p. 92 (Mr Brendish)
[4] Transcript of Evidence, p. 51 (Ms Bun)
[5] Submission No. 63a (National Farmers' Federation),
p. 659.
[6] The Hon J Fahey MP, Minister for Finance
and Administration, 2nd reading speech, House Hansard, 30 March
1998 p 1327 ff
[7] For example, Transcript of Evidence, p.
89 (Mr Perkins), Submission No. 31, p. 237. Another argument put forward
for strengthening the regulatory scheme, or at least confirming it as
final, before sale is that any uncertainty about this will cause the market
to discount its offer for risk, to the detriment of the sale price. Transcript
of Evidence, p. 210 (Prof. J Quiggin)
[8] Transcript of Evidence, p. 225 (Mr Meagher)
[9] Transcript of Evidence, p.112 (Mr Rizzo)
[10] Note: A market may also fall into the
hands of a small number of producers (`oligopoly'), depending on how big
the market is in proportion to the level of production at which increasing
returns to scale disappear.
[11] Transcript of Evidence, p. 226 (Mr Suckling)
[12] This table is reproduced exactly from
Paul Budde Communications Pty Ltd, Telecommunications Networks Market
Australia 1998, 2nd edition, p. 60.
[13] Transcript of Evidence, p. 62 (Mr Horsley)
[14] Transcript of Evidence, p. 65 (Mr Fist)
[15] Submission No. 39 (Telstra Corporation
Ltd.), p. 296.
[16] Department of Communications and the Arts,
Answers to Questions on Notice, 9 May 1998, pp 25-6.
[17] Transcript of Evidence, p. 94 (Mr Grant)
[18] Transcript of Evidence, p. 100 (Ms Campbell)
[19] Transcript of Evidence, p. 95 (Mr Perkins)
[20] Transcript of Evidence, p. 232 (Opening
Statement, Australian Competition and Consumer Commission)
[21] Part XIC, Trade Practices Act 1974
[22] Submission No. 69 (Optus Communications),
p. 571.
[23] Transcript of Evidence, p. 90 (Mr Perkins)
[24] Submission No. 81 (BT Asia Pacific), p.689.
[25] Submission No. 69 (Optus Communications),
p.559.
[26] Transcript of Evidence, p. 91 (Mr Perkins)
[27] Transcript of Evidence, p. 113 (Mr Shore)
[28] Submission No. 39 (Telstra Corporation
Ltd.), p. 289.
[29] For example, Submission No. 53 (Global
One Communications Ltd), p. 383.
[30] Transcript of Evidence, p. 234 (Mr Shogren)
[31] Transcript of Evidence, p. 234 (Mr Shogren)
[32] Submission No. 51 (AAPT Telecommunications),
p. 369.
[33] Submission No. 59 (Macquarie Corporate
Telecommunications Pty Ltd), p. 459.
[34] Submission No. 51 (AAPT Telecommunications),
p. 372.
[35] Submission No. 59 (Macquarie Corporate
Telecommunications), p. 458. See also Submission No. 51 (AAPT Telecommunications),
p. 368.
[36] Transcript of Evidence, pp.112, 121,128
(Mr Rizzo and Mr Ward)
[37] Transcript of Evidence, p. 128 (Mr Ward)
[38] Transcript of Evidence, p. 48 (Mr Chipton)
[39] Submission No.19 (Australian Telecommunications
Industry Association), p. 94.
[40] Transcript of Evidence, pp 101, 102 (Mr
Rizzo)
[41] Transcript of Evidence, p. 49 (Mr Chipton)
[42] Transcript of Evidence, pp 101, 102 (Mr
Rizzo)
[43] Submission No.75 (Office of Asset Sales
and Information Technology Outsourcing), p. 5.
[44] Transcript of Evidence, p. 48 (Mr Chipton)
[45] Submission No.47a (Communications Electrical
Plumbing Union), p. 501.
[46] Transcript of Evidence, p. 127 (Mr Rizzo)
[47] Submission No.47a (Communications Electrical
Plumbing Union), p. 501.
[48] Transcript of Evidence, pp 152, 153 (Ms
Eason)