Australia Yearbook - 2001

832 Year Book Australia 2001
possibility of deregulation and privatisation had
frequently been discussed within Australia.
However concerns, particularly the need to
maintain an adequate and equitable standard of
services for all Australians regardless of locality,
had always prevented the topic from
proceeding to a policy level.
With these developments in the world
telecommunications market new concerns began
to arise within Australia—concerns that Australia
would be unable to remain competitive in the
new economy unless it changed the structure of
its communications industry. Market growth was
necessary, and it was the opinion of an increasing
number that the introduction of competition was
the best way to achieve this. Yet this would
require sweeping changes to the established
industry, changes that carried with them a great
deal of risk. If competition was introduced too
quickly, and without due care, there was a
genuine possibility that new entrants would
flounder, causing the entire Australian
telecommunications industry to become
dangerously destabilised. Caution was warranted.
Mindful of this, in 1991 the Government passed a
new Telecommunications Act. The Act
introduced changes to the Australian
telecommunications industry designed, all things
going well, to eventually lead to the opening of
the market to full-scale competition. As part of
these changes Telecom and OTC were merged to
form a single government player, the Australian
and Overseas Telecommunications Corporation,
renamed Telstra in 1993. In addition, after a long
bidding process for a second
telecommunications licence, a single private
player, Optus, was allowed to enter the Australian
telecommunications marketplace for national
long distance and international telephone calls.
Certain measures were set in place to enable
Optus to gain a foothold beside the incumbent
giant, including guaranteed access to Telecom’s
existing infrastructure on reasonable terms. All
other players would be prevented from entering
the general telephone market until 1997, at
which time a thorough review of the effect of
competition on the market would be completed.
This began the Telecom/Optus duopoly that
would dominate the Australian
telecommunications industry for the rest of the
decade.
Over the next few years further steps towards
open competition were made. Optus began
using its own infrastructure from 1993. On the
recommendation of Austel, the independent
industry regulator introduced in 1990, Vodafone
was permitted to enter the mobile telephony
market with an exclusively digital licence in 1992.
This added a third player to the emerging mobile
industry, as Telecom had been providing mobile
services since 1987 and Optus had been allowed
to buy AUSSAT’s assets and begin mobile
telephony as part of the general duopoly deal of
1991. It also laid the ground work for the
compulsory conversion to digital technology
currently taking place across the
industry—Vodafone agreed to accept the
exclusively digital licence on the sole proviso that
the analogue mobile system being used at the
time would eventually be phased out, placing it
on equal footing with the major players.
All of these gradual changes had one principal
aim: to test the waters of competition in the
Australian telecommunications industry in a
carefully monitored and relatively stable
environment. The 1991 Act declared that if a
review pronounced the experiment a success
full-scale competition would be introduced by
1997. As 1997 rolled round the review was
completed, giving a positive, if slightly tentative,
verdict. Optus had suffered some difficult
periods struggling against the marketplace
dominance of Telstra, but was now performing
strongly. Telecommunications had become the
fastest growing industry in Australia.
On 1 July 1997, the industry was opened up to
full competition. All limitations on the number
of licensed players were removed and
anti-competitive conduct was prohibited.
Telecommunications regulation was aligned
with general competition law, with the
Australian Competition and Consumer
Commission overseeing competition policy
regulation across all sectors. The Australian
Communications Authority still provided some
technical regulation, but the main emphasis was
on encouraging industry self-regulation. The
Australian Communications Industry Forum was
established as an industry body to facilitate and
manage this regulation, including the
development of codes of practice and technical
standards. To allay concerns regarding the
maintenance of service standards, legislative
safety nets were introduced, ensuring that the
Universal Service Obligations that had always
applied to Telstra would now also apply to the
new telecommunications providers. These
obligations aim to guarantee the rights of end
users and ensure that the lucrative urban
market is not developed at the expense of the
rural market.