Decommissioning Telstra’s copper network and migrating all its residential customers on to the National Broadband Network (NBN) is the only viable way to ensure positive outcomes for both the telco industry and consumers, according to NBN Co and the Department of Broadband.
The ACCC running a consultation on the structural separation undertakings (SSU) submitted by Telstra in July.
NBN Co and the Department of Broadband, Communications and the Digital Economy (DBCDE) tendered a joint letter as part of the consultation.
In the letter, both parties saw the $11 billion deal between NBN Co and Telstra as well as additional policy reforms would be the lethal combination that ends the Telstra’s dominance in the telco arena.
The $11 billion agreement deals with shutting down Telstra’s copper assets, including the HFC network, and migrating residential customers onto the NBN.
Parliament passed the Telco reform bill last year which would force Telstra to structurally separate its wholesale and retail arms.
Shadow Communications Minister, Malcolm Turnbull, has been vociferously opposed to the way NBN Co and the Government have been dealing with Telstra as well as the overall rollout of the NBN.
He argued shutting down the HFC network is excessive, claiming it is “economic vandalism”.
Turnbull said if the Coalition comes into power, he would retain the HFC network and rollout the NBN faster and cheaper than the current Government.
But NBN Co and DBCDE disagreed with this sentiment since it would lead to “incomplete structural separation”.
“The HFC network clearly offers the ability to ‘cherry pick’ high value customers, thereby potentially inhibiting NBN Co’s ability to cross subsidise to deliver uniform national wholesale pricing,” both parties said in the letter.
“The Parliament has recently authorised NBN Co to engage in conduct that is necessary to achieve uniform national wholesale pricing.
“Decommissioning of the HFC network would further support the achievement of this objective.”
Without structural separation, Telstra would have to implement functional separation as stipulated in the Telco reform act.
“Functional separation can only ever reduce Telstra’s ability and incentive to discriminate against other service providers in the supply of services over its infrastructure,” the letter said. “It is only through structural separation that the ability and incentives are removed and a truly competitive telecommunications sector can emerge.
“Given functional separation would require unprecedented regulatory intervention, it is unlikely it could be delivered with the same economic efficiency as structural separation.”