Telco NBN bill passes Senate – what now?

A lengthy Telstra structural separation process awaits after it received Senate approval today, according to analysts.

A lengthy Telstra structural separation process awaits after it received Senate approval today, according to analysts.

telco reform bill will see Telstra structurally separate its retail and wholesale arms.

It facilitates the $13.8 billion deal – initially valued at $11 billion - to decommission Telstra’s copper network and migrate customers onto the NBN.

Shareholders will still need to approve the non-binding agreement.

Click here to read What of Telstra if shareholders reject NBN deal?

The bill was on knife edge until the Federal Government agreed to release a condensed version of the NBN Co business case to appease key independents and win their support.

According to Ovum analyst, David Kennedy, it could be some time before the complete separation of Telstra becomes a reality.

“The bill doesn’t set out the specifics of separation,” he said. “What it does is set up a process for Telstra to make a separation plan, which then has to be approved by the ACCC and the Communications Minister, Senator Stephen Conroy.”

Based on structural separation cases in the UK and New Zealand, Kennedy expected a three-way split with one entity managing the copper access network, one will take care of the wholesale division while the other take on the retail division.

Separation should take at least 12 months, he said.

While the Coalition failed to thwart the bill, Market Clarity analyst, Richard Chirgwin, said it could still “demolish” the NBN; a job Opposition leader, Tony Abbott, assigned to Shadow Communications Minister, Malcolm Turnbull.

“[The bill] is a step in the process but even without NBN Co, the structural separation of Telstra has benefits for the telco industry,” Chirgwin said. “So it doesn’t make the NBN irreversible but the bill makes the network harder to eliminate.”

The point of no return for the Coalition’s anti-NBN plan would be when there are enough customers on the network, he said.

NBN Co predicts it will be able to be ready for a business-as-usual rollout and pass through 19 per cent of Australian households by December 2011.

“The success of the project would be the best defense against a political threat,” Chirgwin said. “The failure of execution will be the biggest threat to the NBN between now to whenever the point of no return might be.”

Since the release of the NBN Co business case summary, there has been questions raised about the stipulated price tag of the NBN.

According to the document, the NBN will cost $35.7 billion in capital expenditure, well below its original $43 billion budget.

But the Alliance for Affordable Broadband and the Opposition argue the numbers do not add up.

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Tags Richard ChirgwinovumMarket Claritynational broadband networkdavid kennedyAlliance for Affordable BroadbandNBNTelstra

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