Industry divided on Telstra separation

Industry divided on Telstra separation

Industry proposals to address regulation of the Federal Government's $4.7 billion National Broadband Network (NBN) are reigniting debate over the structural separation of Telstra.

Optus' submission to the government was a blatant appeal to separate Telstra's retail and network infrastructure arms to break the telco giant's monopoly on telecommunications network infrastructure across Australia and ensure healthy competition on the next-generation network.

"The structural separation of Telstra and the upgrade of regulatory settings will finally break the multi-year cycle of Telstra litigating and undermining competition by creating fear, uncertainty and doubt," Optus director of government and corporate affairs, Maha Krishnapillai, said in a statement.

In its submission, the SingTel subsidiary focused on the reforms needed if Telstra were chosen to build and operate the next-generation broadband network.

"Optus makes no apologies for this approach. It reflects our overriding concern that the new regulatory regime must be robust enough to withstand the serious threat to competition posed by an NBN operator which is also the dominant provider of retail voice and broadband services to consumers," the telco stated in its submission.

However, in its own submission Telstra was quick to point out structural separation was destructive and undermined incentives for investing in a next generation network. It highlighted comments made by four international regulatory experts, including former UK Ofcom Commissioner, Kip Meek, who was involved in negotiations to structurally separate British Telecom.

"The UK form of separation was designed to address severe problems of non-price discrimination which, on the basis of evidence I have seen do not exist in Australia and I would not recommend the UK form of separation be used as a starting point in the Australian context," Meek was quoted as saying.

Nevertheless, Telstra has also called for regulatory reform and argued legislation was needed around wholesale access to the NBN. Telstra Wholesale group managing director, Kate McKenzie, also endorsed open access.

Other areas Telstra cited as requiring regulatory changes were maintaining the integrity of the network, guaranteeing emergency services, land access arrangements to deploy nodes and social policy objectives.

Industry representatives have singled out the structural separation issue as the key stumbling block in developing the NBN. While opinions on regulatory controls differed, all agreed clear separation between the operator of the nextgeneration broadband network and its retail use was vital.

"If a proponent proposes to supply both wholesale and retail services it should demonstrate what structural measures or models it proposes be put in place and maintained to prevent inappropriate self-preferential treatment and ensure that effective open access is achieved," the Australian Telecommunications User Group (ATUG) submission stated.

There was also consensus for regulation to monitor pricing and access issues across the new network.

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