Privatization and Deregulation

Australia, in line with most OECD countries, has been gradually liberalizing its telecommunications industry. The Australian Government adopted a phased approach to the introduction of competition, first with the establishment in 1991 of a duopoly to replace the former Government monopoly. Then, in August 1995 the government announced further liberalization of the telecommunication market, known as the Telecommunications Policy Principles, with the intent of introducing even further deregulation in 1997.

Telecommunications Bill of 1996

The Telecommunications Bill of 1996, which was recently passed in the Australian Cabinet, intends to replace the Telecommunications Act of 1991. The goal is to have one of the most open and competitive telecommunications infrastructure in the world where Australians would enjoy cheaper communications and services, with improved services and choices. The list below outlines the features of the Bill:

· full and open competition beginning July 1, 1997;

· continued separation of regulation of carriage from regulation to content;

· neutrality with respect to carriage technologies;

· the full application of national competition law to telecommunications, with additional powers for the Australian Competition and Consumer Commission to prevent anti-competitive conduct;

· full interconnection of networks and guaranteed access for carriers, service and content providers;

· universal consumer access to a standard range of telecommunications and payphone services;

· continuation of targeted government assistance, including rebates for social security recipients;

· continued use of price caps on Telstra to ensure price reductions in services;

· greater reliance on the industry to self-regulate, with fail safe mechanisms in the event that self regulation does not work;

· increased protection of consumers; and

· continuation of industry development programs. (Innovative Australia)

Industry Structure

Due to continual deregulation, the market has undergone significant changes over the past six years. The industry today is characterized by the following features:

· Optus now competes with Telecom for long distance domestic and international traffic where it is estimated that Optus has approximately 15-20% of this market.

· Telecom continues to have a monopoly in the carriage of local telephony.

· Each Telecom, Optus, and Vodafone provide Public Mobile Telephone Services.

· There are a large number of service providers ranging from simple resale to the full range of value-added services.

Although government reports indicate that the deregulation is supposed to provide cheaper communications and services for all Australians; a report by the Bureau of Industry Economics said that partial deregulation of the marketplace has failed to increase competition. In fact, the report ranked Australia 11th out of 22, stating that businesses pay higher than average prices for key services including domestic long-distance calls. However, prices faired more favorably for mobile charges, international call charges and leased line services, areas where deregulation has been greatest.

URL: http://www.http://gurukul.ucc.american.edu/initeb/lk0767a/australi.htm

Author: Linda Kallmeyer

Last Update: May 6, 1997