Finally, the breakup we had to have

How long have we waited for the Federal Government to get serious on Telstra and separation? We had Labor fail to do this when deregulating telecommunications and the Coalition pass up opportunities to do something when privatising the rest of Telstra. Now, the Government looks set to do something.

Telstra Corporation will be forced to split its retail and wholesale businesses or risk losing access to wireless broadband under new reforms proposed by the federal government.

Under the plans, the government will force Telstra to conduct its network operations and wholesale functions at arm’s length from the rest of the company if it does not voluntarily do so through an undertaking to the Australian Competition and Consumer Commission (ACCC).

Hmm, not quite structural separation but the spectrum threat is interesting.

Telstra would also be prevented from acquiring additional spectrum for advanced wireless broadband while it remains vertically integrated, owns a hybrid fibre coaxial cable network and has an interest in Foxtel.

Some of us have been saying this for some time.

This direction is interesting but how this will play out is somewhat uncertain. Will Telstra do things voluntarily on their own terms or fight to the death and drag it all out. For now, we can applaud the solid change in Government direction. As Minister Conroy said: “The measures in this legislation will finally correct the mistakes of the past.” Amen to that.

3 thoughts on “Finally, the breakup we had to have”

  1. Joshua

    A quick question. This is obviously not ownership unbundling but legal unbundling. The EU’s experience in many areas, and in particular energy markets, has been that legal unbundling has been less successful at generating competitive outcomes than ownership unbundling and that failing to go the extra step could limit the benefits of the reforms.

    Do you have a view on that?

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  2. I’m unsure of how the governement plans to set-up a NBN. Will it be public or privately-owned? Regardless, how will a monopoly NBN provider respond to the objectives of investing and innovating their network in response to consumer needs?

    As an ex-engineer with inside perspective into the former monopoly Aussie Telecom (in the absence of genuine network competitors), the state of the network in terms of both performance and service left much to be desired. How can a monoploy infrstructure-based NBN company avoid such a trap (being one stage removed from consumers)?

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