sovereign risk, page-11

Henster wrote.
"Winter has clearly pointed out Timber's incorrect statements without emotion or personal attack, from where I sit its pretty clear who the emotional ones are in this little side show"

Timber had stated "a monopolistic public company is failing to develop telecommunications infrastructure to protect its position of market dominance."
Winter replied that the Government knocked back the Telstra FTTN proposal.

When my memory of the situation was that Telstra withdrew it's FTTN proposal after 98% of negotiations had been completed.
Telstra claiming that the major stumbling block was with the ACCC and pricing. Not unlike the situation we face now with Telstra and the Government negotiating a fair price for Telstra's last mile assets.

from http://www.accc.gov.au/content/index.phtml/itemId/757949/fromItemId/2332

"The Australian Competition and Consumer Commission is perplexed by today's announcement by Telstra that it has unilaterally decided to discontinue talks with the ACCC over Telstra's proposed fibre-to-the-node network upgrade, ACCC Chairman, Mr Graeme Samuel, said today.

"The ACCC last received documentation from Telstra on a FTTN access service and its pricing for this new service in late June, and was awaiting details on a transition plan for access seekers from current unconditioned local loop arrangements", he said. "Given that Telstra only recently said that the discussions between it and the ACCC were '98 per cent' complete, the ACCC is perplexed that Telstra has now chosen to discontinue these discussions and withdraw its proposed fibre roll out.

"It is our view that it would have been preferable for Telstra to place details of its proposal on the table for public examination, but Telstra appeared unwilling to do so.

"The ACCC would be concerned if Telstra's decision not to proceed at this time were as a consequence of the ACCC's call last week to lay the FTTN plans open for public scrutiny. We are perplexed as to why Telstra would not want to do this.

"Telstra has indicated that 'the major stumbling block was the ACCC's unwillingness to recognise the actual costs that Telstra incurs in providing its services' but from the commencement of the ACCC's discussions with Telstra, the ACCC accepted 'that Telstra should be entitled to recover its actual costs arising from the FTTN upgrade' and that 'Telstra faces a significant risk that should be reflected in the cost of capital used to calculate access prices' ".

"The ACCC notes that that the calculations which Telstra has provided, to date, on the costs of services on its existing network have been based not on its actual costs or its regulatory accounts, but on Telstra's own highly contentious economic model.

"What is equally perplexing is that as recently as yesterday [Sunday], Telstra provided comments to the ACCC seeking further feedback on its claimed costs for Telstra's existing network".

Mr Samuel said Telstra also claimed that it could not reach agreement with the ACCC on the extent of cross-subsidies to be provided by urban consumers to finance the cost of its services to rural and remote Australia.

"But at no stage in the discussions has Telstra ever proposed that its FTTN network would be rolled out to rural and remote Australia.

"Further, the ACCC does not agree with Telstra claims that there is an irreconcilable conflict between government policy on universal services and the ACCC's approach to access prices. In the ACCC's view, both are compatible with ensuring that Telstra's investment achieves a commercial return"