Telstra break-up legislation faces political opposition

21 Jan 2010

Despite expectations that laws which could act as a forerunner to the break-up of Australian fixed line incumbent Telstra would pass without issue, Reuters is reporting that the proposals could face parliamentary defeat. The legislation, which is due to be considered by the Senate in February 2010, could force Telstra to structurally separate its retail and network units. Opposition MP Bruce Scott said of the proposals: ‘All they have done is hold a gun to the head of Telstra…and there is no guarantee with this that when markets fail in future, that there will be a communications supplier in remote areas for what is an essential service, a right.’ While the government does not currently hold a majority in the upper house, it had been widely expected that the National Party of Australia would back the plans on the grounds that it would benefit voters in its key rural areas of support. Scott, however, has indicated that no such assumption can be made, claiming that under the proposals many rural areas would benefit little from the National Broadband Network project. ‘It would be a betrayal of the bush if this goes through and would leave at least 10% to 20% of Australians who live in rural areas behind,’ the politician said.

In addition, the Australian Greens, who control five Senate votes, have also noted that their representatives in the Senate remained some way off agreeing to the laws. ‘It would send a bit of an earthquake through the sector,’ Australian Greens senator and communications spokesman Scott Ludlam said. Independent senator Steve Fielding meanwhile has criticised the government’s ‘sledgehammer approach’, noting: ‘At the end of the day you’ve got to have the government and Telstra sit down together to work something through.’

Under the proposals Telstra could face a ban on acquiring any additional wireless spectrum, which could in turn hinder the expansion and upgrade of its NextG mobile broadband service, should the telco refuse to separate its assets, while the state may also force it to divest its 50% stake in cable network Foxtel.

Australia, Dept. of Infrastructure, Transport, Regional Dev. and Comms, Telstra (incl. Belong)