CommBank's Telstra deal has separation clause

Summary:Commonwealth Bank of Australia's billion-dollar telecommunications deal recently inked with Telstra contains provisions allowing the bank to guard itself against any effects of regulatory separation in the telco's operations, the bank revealed this week.

Commonwealth Bank of Australia's billion-dollar telecommunications deal recently inked with Telstra contains provisions allowing the bank to guard itself against any effects of regulatory separation in the telco's operations, the bank revealed this week.

Michael Harte
(Credit: ZDNet.com.au)

The Federal Government has named structural separation of Telstra's operations as one possible outcome of a review of the telco industry regulatory regime associated with the $43 billion National Broadband Network project.

It was clear, according to the bank's chief information officer Michael Harte, that the government was serious about broadband. "It was likely that if Telstra didn't play well, that there would need to be some technical structural or operational form to ensure that they delivered those services at an equitable price," Harte said yesterday at a briefing to launch the bank's new NetBank portal.

When the CIO looked at signing a $1 billion deal that would continue for a decade, he said he needed to look at events which might happen in a few years time and their effect on how the telco dealt with its customers.

Although he wasn't able to detail the contractual details the bank had built into its deal with the telco, Harte made it clear that should Telstra's performance be affected, the bank had the right to change the rules.

"Should that structural change mean different performance or different promises then we want to be able to adjust the arrangement," Harte said. "If they are no longer focused on this business because of organisational change then we also want the convenience to go and partner with an organisation which does want to have a long-term relationship with us."

Telstra overcame fellow bidders BT, Optus and incumbent supplier, Telecom New Zealand subsidiary, Gen-i, which dropped out of the race in July last year.

The contract wasn't usual even without the separation provisions, according to previous conversations with Harte, since it didn't use service level agreements, instead expecting the telco to go beyond those traditional benchmarks to provide a service free of supplier-caused outage if it wanted to get paid, with higher pay for peak demand periods.

Other companies have also been looking more closely at their contractors' deals. The National Australia Bank recently confirmed that it was asking contractors to reduce their rates when their contracts came up for renewal.

Topics: CXO, Banking, Legal, Telcos, Telstra

About

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for t... Full Bio

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