Industry body: Act now to operationally separate Telstra

The Competitive Carriers Coalition (CCC) wants to see a faster route to operationally separate Telstra, and has pointed to an example abroad to back its call.

The UK’s independent competition regulatory authority, OfCom, has released a report highlighting how competition has increased and the price of broadband has decreased since British Telecom (BT) was forced to divide its wholesale and retail arms in 2005.

CCC executive director, David Forman, said while the National Broadband Network (NBN) would start off as a structurally separated infrastructure, consumers should not have to wait for several years for the network to be launched before the market changes.

"What the UK has done shows that when changes are made, dramatic effects can be seen really quickly in a competitive market," he said.

While Forman could not comment on whether Telstra has changed its vehement attitude against separation under the new management, he said the matter should not be left in the telco’s hands.

"The company benefits from structural problems in the industry hampering competition so it is never going to separate voluntarily," he said. "It is a policy matter in which the government will have to make a decision on and once it is made, Telstra will have to live with it."

In April, the Federal Government invited submissions on its regulatory reforms paper with Telstra’s functional separation on the cards. The response was overwhelming, with 127 submissions made to the report. As a result, the CCC expects to see legislation to be introduced next month to address the issue.

But while consumers may revel in cheaper broadband access, Telstra’s predicament could mirror that of BT, with the UK telco’s share prices plunging 65 per cent since the structural reform in 2005. Telecom NZ, which has a similar experience to BT, also experienced a drop in share prices.

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