Canberra Bids to Keep Telstra on Tight Leash

The federal Government has signalled its resolve to do everything necessary to curtail Telstra's dominance of the Australian telecommunications market.

Amid concern that Telstra would be able to use its market power to hinder the successful rollout of the Government's new National Broadband Network, Communications Minister Stephen Conroy yesterday called for submissions on a range of new regulations. One of the most radical would be the "functional separation" of Telstra's network operations from its other divisions. This would involve ring-fencing Telstra's network operations and ensuring all companies seeking access to the new network, including Telstra's retail arm, were treated equally.

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Telstra's rivals were enthusiastic about the tone of the discussion paper and its implications for Telstra."This regulatory paper does everything we have asked for and more for the last decade," said Optus government and corporate affairs director Maha Krishnapillai. "It covers everything from functional separation and short-term pricing to tougher powers for the ACCC and divestiture of the HFC (hybrid fibre coaxial) network.  "It's an absolute game-changer for the telco sector and introduces for the first time a level playing field."

Lobby group the Competitive Carriers Coalition said it was now only a matter of time before Telstra would be forced to functional separation. "I give them six months," executive director David Forman said. "They can change their ways or they can have their ways changed for them. "The regulatory paper says today's arrangements are not working and that we need drastic reform before this NBN is completed in the next eight years. "We need a much stronger, more effective internal separation of Telstra."

JPMorgan analyst Laurent Horrut said: "The fact that the Government is raising separation as a big issue for the regulatory framework is a sign that they are very serious about it. "There is a reasonably high chance that the Government will do it. But it is dependent on the potential discussion that Telstra has and whether it wants to be part of this FTTH network."

Author: Mitchell Bingemann
Full Article: Australian IT


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