ACCC tells Telstra to replan separation

ACCC tells Telstra to replan separation

Summary: The Australian Competition and Consumer Commission (ACCC) has indicated that it may reject Telstra's structural separation undertaking filed last month, citing concerns about assurances from the telco offering equivalent wholesale services to its competitors.

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The Australian Competition and Consumer Commission (ACCC) has indicated that it may reject Telstra's structural separation undertaking filed last month, citing concerns about assurances from the telco offering equivalent wholesale services to its competitors.

Last month, Australia's largest telecommunications company submitted to the ACCC its plans to structurally separate and migrate customers onto the National Broadband Network (NBN). The plan aims to address how Telstra's wholesale business will function in the interim 10-year period as the NBN rolls out across the country.

The regulator today published a discussion paper (PDF) airing its concerns to the structural separation documents, telling the telco that it didn't make it clear that the services offered to its retail competitors would be equal to that offered on its own retail arm.

"The ACCC's main area of concern ... relates to the adequacy of Telstra's proposed interim equivalence and transparency measures. The ACCC's initial view is that there needs to be a clear and enforceable commitment to an 'equivalence of outcomes' that enables wholesale customers and Telstra's retail businesses to gain access to key input services of equivalent quality and functionality," new ACCC chair Rod Sims said in a statement.

The concerns on equivalent services seem to reflect those raised by Optus when Telstra lodged the initial plan. At the time, Optus described Telstra's structural separation plan as "the bare minimum", and a basic repackaging of what Telstra does in the current regulatory environment.

The competition watchdog was also concerned that a clause in the plan would have allowed Telstra and NBN Co to make agreements further down the track that would be exempt from competition regulation without the consent of the ACCC.

The ACCC said that it anticipates that Telstra will consider these issues and submit a revised structural separation plan, and has called for industry to comment on the plan before 27 September 2011.

In a statement to the Australian Stock Exchange, Telstra's company secretary Carmel Mulher said that Telstra will work with the ACCC to resolve the issues before the Annual General Meeting on 18 October, where shareholders are set to vote on the NBN deal.

"If this does not occur, Telstra may nonetheless seek Telstra shareholder approval at that meeting," she said.

Industry lobby group, the Competitive Carriers Coalition, today said that Telstra failed to consult with competitors before creating the separation plan, and said that Telstra should not try to force the ACCC to hurry along in its decision process.

"Telstra must accept that as a consequence of its poor management of the process to develop the first version of its undertaking, it cannot now meet its deadline to present its plans to its shareholders in October. Telstra should not expect the regulatory process to be compromised to accommodate its own failure," the spokesperson said.

"Telstra should now do the right thing and ask the ACCC to suspend the present undertaking while it does the necessary work with access seekers to make the fundamental changes needed to bring its undertaking up to the appropriate standard."

Topics: NBN, Broadband, Telcos, Telstra

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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4 comments
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  • Roll on the day with the handover of Telstra Wholesale to the NBN Co thereby creating a level playing field for all, and the finish of the sickening whine of Telstra opponents and the emergence of intense and fierce competition from Telstra, Australians will choose Telstra as their supplier of preference because of superior product and price.
    sydneyla
    • While that option sounds superficially attractive - it raises two major problems:

      1. This is quite simply a massive buy-back - and would be extraordinarily expensive. You can't simply point a legislative gun at Telstra and say "hand over the goods!" You would have to compensate Telstra for that, to the tune of some $20 billion.

      2. Even if you could get around the first reason, there is no way that the management of NBN Co (which wants to run a lean, mean operation) would be happy to be have all the old clutter of the Telstra copper network dumped on it.

      If full structural separation had been achieved a decade ago, then it might well be appropriate to use the company housing the copper network and exchanges to roll out fibre to replace its own copper - subject to continuing open access provisions. But it's too late for that now, which is why NBN Co was needed. Anything else is a backward step.
      Gwyntaglaw
  • I think the real issue is the quality of management and I fear the NBN is having a similar problem. And the cost of the NBN continues to rise to a point were it will be unfordable.
    GBE-71384
  • Gwyntaglaw you are correct and it is a fact that I did relate to the Telstra changeover in a confusing manner. I certainly did not mean to relate that the NBN Co would take possession of the copper cables etc owned by Telstra.

    I was referring to the time, probably, hopefully, around 2018 when as Telstra transfers its cable customers to the NBN this Wholesale section of Telstra will no longer exist. Telstra will, of course retain ownership of the copper.
    sydneyla