08/06/2004 - 22:00

In the name of competition

08/06/2004 - 22:00

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LAST week’s introduction of full contestability in the retail gas market arrived with more of a muted whimper than any sort of big bang.

LAST week’s introduction of full contestability in the retail gas market arrived with more of a muted whimper than any sort of big bang.

No line-up of players to challenge the incumbent, no ridiculous deals to attract householders with easy credit and cheap prices as Western Australia discards the dark old days of monopolistic energy.

It’s disappointing to see so little from an attempt to make WA more competitive.

I suppose the positive side of the coin is that so many Western Australians, and I’m one, hold Alinta shares and will therefore have the lack of deregulation neutralised to some extent by their earnings in this respect.

From my vantage point the root cause of this stillborn deregulation is the failure to break up Western Power.

Whoever is to blame is costing this State dearly.

Many players, it appears, were waiting in the wings to offer gas and electricity.

With electricity looking to remain under the monopoly of Western Power as the battle to break it up rages on, few energy competitors are interested in WA.

So, Alinta wins a reprieve from competition here as it seeks to establish itself in other markets.

Hopefully this is not a long-term situation, as much as Alinta might be happy with the status quo.

With competition now legal, maybe a few adventurous types will find niche markets to start to chip away at this uncompetitive market.

My recollection of the deregulation of the telecommunications market is vague but the process has spawned significant competition, even if it has been hamstrung by the decision to keep intact Telstra, a company in which I also hold shares.

Many in the market to this day complain about Telstra’s behaviour, claiming anti-competitive practices – though we heard little of this at our telco lunch a week ago.

While I have no doubt that Australia would have been, and would still be, better off if Telstra’s infrastructure had been separated from its retail arm – it’s at least promising to see the half-privatised behemoth is now being challenged in a number of areas.

It seems that where technology breakthroughs have created new products (mobile phones and Internet services spring to mind), real competition to Telstra has been spawned, despite the barriers to entry created by insufficient market reforms.

While other telcos have justifiable issues in dealing with their major retail competitor for wholesale supplies, they have seriously changed the consumer market for the better.

The big question is whether such a thing can happen in energy.

Without major reform of the WA electricity sector, to open the whole energy market to real competition, what else is likely to alter the current market dynamic?

I am certainly not privy to latest developments in gas or electricity generation, but I can’t see the mobile phone or Internet equivalent in energy just over the horizon.

Please let me know if you can.

ITC call sounds pretty good

IT was interesting to see the Australian Computer Society make a call this week for Western Australia to develop a strong information and communications technology sector.

The ACS brought up the usual issue of a lack of funding for the sector in calling for “a working group of notable entrepreneurs and other industry figures” to identify the way forward and improve the situation in WA.

The call was very similar to a letter we published last week by Ken Grogan, an individual interested in the sector.

Mr Grogan, who has a private IT business called VL Global, believes that there is too little cooperation between the commercial and university sectors.

His answer was to develop a centralised body, calling for the establishment of a WA-centric industry and e-science council “charged to coinvest in an e-science research institution”.

Sounds like a few people are singing from the same song sheet here, which is usually a good portent to achieving something.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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