Telstra given reprieve for submission of separation plan

26 Apr 2011

Australian fixed line incumbent Telstra has been handed a 90-day extension for the deadline by which it must submit a plan for the separation of its retail and wholesale arms, The Australian reports. Having been initially required to submit its structural separation proposal to the Australian Competition and Consumer Commission (ACCC) before 1 April 2011, it has emerged that the telco will now be given until 30 June to put forward its plans. The extension comes as Telstra continues to negotiate with both the government and the public-private company set up to oversee the construction of the country’s National Broadband Network (NBN), NBN Co, over the terms under which it will transfer its customers to the new high speed infrastructure. The handling of the matter by communications minister Stephen Conroy, who has previously described Telstra’s structural separation as ‘the holy grail of microeconomic reform’, has however raised concern among other operators, with the report citing one unnamed telco executive as saying: ‘The concern is that Telstra and the minister could presumably use this tactic to delay Telstra’s separation indefinitely … The reason this [the recent Competition and Consumer Safeguards Act] was put in place was to ensure that Telstra wouldn’t dither or procrastinate on its obligations to structurally separate. The longer the delay we have from this point means that more time will be added before the NBN can progress.’ Despite such fears, a spokeswoman for Senator Conroy said the government was satisfied that the incumbent was moving forward with its plans for separation, noting: ‘The deal between NBN Co and Telstra will see full structural separation achieved when Telstra migrates its customers to the wholesale-only NBN and decommissions its copper network. As NBN Co and Telstra have stated publicly, their negotiations are progressing well.’

Before Telstra can submit its separation proposals however, Mr Conroy is required to make a written determination to the ACCC setting out a list of requirements, including elements such as the timing and manner of how Telstra will migrate its customers to the new infrastructure. The Competitive Carriers’ Coalition, an industry lobby group which includes a number of Telstra’s rivals, is meanwhile pressing the government to release the draft terms that will be used to judge whether the telco meets the separation requirements.

Australia, Telstra (incl. Belong)