Telstra to fight separation Bill

Telstra to fight separation Bill

Summary: Telstra said today it will oppose the passage of the government's Bill which would allow it to force separation on the big telecommunications company.


update Telstra said today it will oppose the passage of the government's Bill which would allow it to force separation on the big telecommunications company.

David Thodey, not so toothless, it seems (Credit: Telstra)

In its submission to the Senate Standing Committee looking into the proposed legislation amendments, Telstra said the new legislation would stop Australia achieving the National Broadband Network (NBN), reduce competition, harm consumers, not necessarily result in industry reform and potentially destroy value for the 1.4 million Australian shareholders who purchased Telstra shares from the government.

"Therefore, Telstra has no choice but to oppose the passage of the Bill in its current form," the telco said. "It is unworkable."

Why Telstra didn't want the Bill
It was not only unworkable, but unnecessary, according to the telco, which denied the market wasn't working, and vehemently denied that, if it were so, it was at the heart of the trouble.

Telstra said it didn't like either of the alternatives offered to it in the central part of the Bill; to voluntarily structurally separate or be forced to a functional separation.

Functional separation disrupted network and product innovation for years, the telco said, pointing experiences from the UK and New Zealand, and said structural separation implemented in the US had largely been rolled back. Both would divert resources from the NBN, it believed.

Instead, it suggested remodelling its operational support systems to operate in a customer-agnostic fashion, with the wholesale and retail business unit "plugging in" at the same level and functionality, ostensibly giving wholesale customers the ability to compete with its own retail facing units.

The telco was not better pleased with other components of the Bill, such as those that could deny Telstra access to spectrum. It would gain nothing for the NBN while damaging the market, consumers and Telstra employees, it said.

"Given that the NBN delivers the government's preferred industry structure and that wireless is not a regulated service, there is simply no policy rationale for such an exclusion," Telstra said.

Forcing Telstra to divest Foxtel and its hybrid fibre-coaxial cable would also serve no public interest, the telco believed. There was a competitor's network in the case of the HFC cable, and as for Foxtel, media heavies such as News Corporation and Consolidated Media Holdings would likely snap it up to the detriment of Australian consumers.

The changes to the access regime didn't confine the way the Regulator, the Australian Competition and Consumer Commission, could use its powers enough and enabled it to ditch procedural fairness, Telstra said — creating regulatory uncertainty as opposed to ending it.

The Bill was wrong
Telstra then pointed out what it considered to be factual errors in the Bill. It said its level of integration wasn't unusual, claiming that "virtually every major incumbent telecommunications carrier in the world is vertically integrated". Even its horizontal integration wasn't strange, it said, naming examples such as Deutsche Telekom and AT&T.

Neither was the level of competition insufficient or ineffective, it claimed, talking about the number of its competitors, listing those involved in backhaul. It also implied that separation had been more global flop than global trend, saying that only a handful of OECD countries had implemented functional separation and a number of European regulators had spoken out on it.

The Bill had also said that Telstra's retail market share was on the rise. Au contraire, the telco said, flourishing statistics for 2008/2009 which showed it had lost retail market share.

Last of all, Telstra denied it was the only one to benefit from regulatory arrangements, saying that competitors had benefited from the ACCC's decisions over the years.

At least change it
For the case that the government did decide to continue with its plans, Telstra put forward a number of changes to the Bill to make it more palatable for its board, management and shareholders.

The telco wanted the parts of the Bill dealing with its voluntary structural separation and loss of Foxtel deleted completely.

The telco said the Bill should also be changed to say that functional separation must not:

  • Be unduly burdensome and degrade Telstra's retail or wholesale service quality
  • Impede Telstra's ability to compete fairly
  • Force Telstra to physically separate information systems or networks
  • Stop network and wholesale using common information and network operations systems directly through equivalent interfaces
  • Stop Telstra from creating internal network units to provide in-sourcing of services at arm's length to the retail business unit and network/wholesale business unit
  • Stop Telstra from using common HR, legal, technology and network planning services

Telstra also wanted Minister Conroy's discretion curtailed on certain matters and said that the spectrum section of the Bill had to be deleted entirely. It wanted the legislation to include rules governing the ACCC's conduct and allowing the review of the ACCC's decisions, as well as asking for changes to the parts touching the universal service obligation.

Customer service guarantees had to add a requirement of reasonableness, the telco said, and wholesale providers shouldn't be measured by performance standards or benchmarks because they didn't have control of external systems to interface with.

Telstra also asked that if the bill were to go ahead, that the Senate delay debate on it until after Telstra had finished its discussions with the government over the NBN and the NBN implementation study had been completed.

Topics: NBN, Broadband, Government AU, Telcos, Telstra

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at 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 the site.

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.


Log in or register to join the discussion
  • And so it begins...

    And so it begins...
  • Part one, I like the movie...

    bring on part 2
  • Learn the truth

    29 page submission to the Seanate enquiry.
  • I'm not a big fan of Telstra

    but I support this move.

    Let them compete with the NBN, let them all innovate, cut costs, work out economy and deliver a better solution for the end user.
  • Fair enough.

    The most important bit in the 29 page submission, in my opinion is, ....." and have a significant detrimental impact on our employees."

    All 30,000 of them. The forgotten asset in the equation.
  • uh...

    No offense but thats a bit rich - Telstra is its employees worst enemy anyway.
  • Fire away anon...

    Don't worry about being offensive towards Vasso.

    This delightful [sic] retired, Telstra shareholder, just referred to me as rat sh*t and an ignoramus in another ZD thread, lol...

    Simply because he has lost so much money on Telstra shares, but mainly becasue of that "never to be" harbourside mansion and Ferrari he was actually expecting to buy with his TLS windfall, lol.

    Unfortunately he can't handle the truth and this is how he reacts, so fire away, the rules have been torn up...
  • No suprise.

    Nothing unexpected here. The only suprise to me was how weakly they argued the case for non-seperation.
    Basically begging not to be seperated, but if you're going to do it, please let us talk to the Government first so we can make it as painless as possible.

    Unfortunately their arguement that customers would be worse off, to me seems just false. They should have been treating customers better in the first place then maybe it wouldn't have got this bad.

    As for the Telstra shareholders. Tough luck sorry. Did you read the prospectus? It DID mention that seperation etc may have an adverse affect on share price, but you bought anyway....
  • The rules the rules

    I must follow myself every where as my demented mind can no longer keep track of what I have done ....

    My unending spiral into the depths of hatred of all those who are more successful than myself has now become my all consuming passion.

    If I cant have it no one else can and I shall do all in my power to bring them to their knees....

    As I spiral further and further from reality to try and escape my inept life..... The rules are becoming lost in the blue and orange of my most hated antagonist.....

    PLease please RS save me from myself.........
  • Prospectus

    As with all share purchases as you have said the prospectus should be read.

    The only part of this argument should be is "why is the government wanting to do this?

    Are they afraid to compete against Telstra?

    Yes share prices fluctuate and no doubt we have all suffered the fate of telstra shareholders at some stage!!!

    Let us continue with the time honored tradition of bringing down any Australian success no matter how we do it.

    Oh no, my life the spiral the never ending spiral.........
  • Successful

    Ooh I wish for $100000 of losses like you, successful Telstra puppet. lol...

    Let me remind you - $3.16, lol
  • Godd Move THODEY!!!o

    I also are not a big fan of Telstra, however, I support this decision not to DECIMATE a great Australian company at the behest & advantage of foreign owned Telco's like SINGTEL owned OPTUS!!

    A win for all Australians!!!
  • re prospectus

    Are you for real? Are you from planet earth? Maybe not, so greetings.

    They want to take Australia's telecommunications back out of the hands of self promoting bunch of profiteering racketeers.
  • Time for Truth.

    Now Senator Conroy please explain your Win, Win solution for the NBN to us.
  • How about this?

    If Conroy and his mates are intent on destroying this great Australian company maybe they should look elsewhere to invest their capital and innovation. Call their bluff David!
  • Unsuccessful

    Yet again I can but o no more than to try and drag those who are more successful than my own foolish self, down into the depths of despair that is my life......

    Whom shall I belittle and insult now so as to be able to further my empty life

    Forever to be able to look up to myself as the failure that I am.
  • Good luck Telstra

    Which employees does Thodey consider to be at risk? Certainly not all of the jobs that Telstra has outsourced to call centres outside of Australia.

    Telstra has ignored the bush, replaced CDMA with reduced next-g coverage, withheld ADSL2 from their customers and generally ripped off Australia.

    I expect labour voters will support Rudd and many of those voting for the nationals are likely to agree with the government. Labour stands to gain votes by standing up to Telstra so there is no incentive for them to go easy on Telstra.
  • Junior

    Drag those who are successful down, lol...

    A successful TLS shareholder - there is no such thing o junior wise one!

    Have I not taught you properly? To the dunces corner with you for 3.16 minutes.
  • Time for the truth

    You may have noticed that I've stumbled across a new poster, who is pretending to be me, lol...

    Do you condone such things in your quest for Telstra wealth?

    You guys are getting pretty desperate, you can feel it all imploding, eh?
  • You fail to realise that...

    1. Telstra has foreign investors
    2. A lot of telco's are 100% Australian owned