Telstra’s chief spin doctor Phil Burgess was on Fran Kelly’s Radio National Breakfast show this morning talking up the campaign against Government regulation. We can expect to hear a lot more of this as Telstra uses its muscle in an election year.

So it is worth revisiting why regulating Telstra is a very good idea indeed – particularly at a time when there are lots of reasons to worry about diversity of media ownership.

Telstra is not just a telco. It is a media company and increasingly getting into the content business. Only a few years ago it looked at buying Fairfax, and it is likely to be a player in the media shakeup once new ownership laws are proclaimed.

We are moving into an era when the main profitable means of delivering media content will be the internet and mobile broadcasting and telecommunications. At present the main method of delivering fast internet access is by ADSL – delivered over conventional phone lines, almost all of which are owned by Telstra. If it were not for government regulation Telstra could be a monopoly provider, holding the future of Australian media in its hands. Telstra would be – and still could be – a media empire that would make Rupert Murdoch and Kerry Packer look puny.

As it is Government regulation forces Telstra to sell access to the infrastructure to its competitors at prices regulated by Government. Hence the ongoing stoushes with the competition regulator, particularly over access to the new fibre networks Telstra says it wants to build.

Who can doubt that in time Telstra will also pick up the argument of USA telcos that they should be able to charge differential prices for “premium” internet access, ending the principle of “network neutrality”?

There are very good reasons, therefore, for tough competition law-based regulation of Telstra. The head of the ACCC, Graeme Samuel, laid out his case in this speech among others.

What about Telstra’s claim that the regulator is preventing Australia from getting up to speed on Broadband? Horsesh-t. Telstra is the main game, but not the only game, in town. There is the G9 group of Telstra’s competitors, which is reported today to be gearing up to build its own fibre network. There is satellite broadband and there is wireless broadband and other technologies as well. Telstra could be delivering faster speeds to more Australians right now, if it wanted.

Nor is Telstra the only hope for regional Australia, as Burgess implied. Austar, with its consortium partners Internet Soul and Unwired, is already running pilot WiMAX networks in Wagga Wagga and Tamworth with plans for 25 more services by the end of 2007.

Of course Telstra is entitled to campaign to get the best deal for its shareholders, but to dress itself up as some kind of philanthropist consumer advocate fighting an unreasonable government is more than a bit rich.

Peter Fray

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