Telstra: We hear separation rumours

Telstra: We hear separation rumours

Summary: Is the government manoeuvring towards a structural separation of Telstra?


Is the government manoeuvring towards a structural separation of Telstra?

Telstra's Group MD for Public Policy and Communications says they've heard rumours but no one from the government has spoken to them about the prospect. Nor have they been consulted about integrating the winning National Broadband Network bid into the Telstra network.

Does this indicate that the government's broader plan is to announce a split of Telstra's retail and wholesale divisions as a means of facilitating the build of the NBN?

In this week's Twisted Wire Phil Dobbie talks to David Quilty, who says that that approach is not necessary and is likely to be counter-productive. Does Quilty see the ACCC's threatened court action as a forerunner to separation? If the outcome is unfavourable for Telstra will the company consider legal action of its own undertaking?

It's a complex issue. Add your thoughts to the debate in the comments section at the end of this post.

Next week Optus shares its views on the issue. Why does it see structural separation as being necessary?

Phil Dobbie is a broadcaster and businessman with more than 15 years commercial experience across the telecommunications, internet, tourism, advertising and radio industries. Dobbie also provides a daily podcast for our sister site Join him for BTalk Australia, where he provides a lively and insightful view on business issues, adding his blend of irony and humour to the discussions.

Topics: Government, Broadband, E-Commerce, Government AU, Telcos, Telstra, NBN


Phil Dobbie has a wealth of radio and business experience. He started his career in commercial radio in the UK and, since coming to Australia in 1991, has held senior marketing and management roles with Telstra, OzEmail, the British Tourist Authority and other telecommunications, media, travel and advertising businesses.

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  • It won't work so why bother?

    I've always said that I don't support a seperation of Telstra. What I do support are easier ways for Telstra's market might to be competed with OR a government buyout of Telstra and every single ISP coupled with regulation of prices just like the old days. Either way we'll see a lower price so that everyone can afford a phone and Internet access.

    Seperating Telstra would just lead to the two seperate entities colluding in some way and there'd be no real improvement on the situation that currently sees Telstra wanting to control everything.
  • Optus spongeing again..

    The only ones who will benefit from a Telstra separstion will be th OPTUS/Singtel crowd so the free ride thay ejoy will continue!

    Stop the foreign owned companies sponging off Aussie companies!!
  • Comm or comm?

    Regulated, State owned comms?

    Would make comm short for communism, wouldn't it?
  • Telstra is a bit confused

    "Nor have they (Testra) been consulted about integrating the winning National Broadband Network bid into the Telstra network."
    I think Telstra will be the one integrating their own network into the NBN. The copper pairs into each premise will have been taken off the Telstra network and put onto the NBN. How Telstra will keep their existing customers connected is up to Telstra to work out with the NBN provider.
  • Really?

    So the government can take property off a private enterprise. How much will they pay for it. Is that on top of the funds promised to the NBN bidder?
  • @ comm or comm

    Yes indeed, how ironic.

    Mel, the right wing extremist is actually a closet commie, hey comrade, rofl!
  • Yes, really. As strange as it sounds...

    The High Court has already determined that Telstra does not own the copper pair but has responsibility for maintaining it.
    I'm not saying that that's a good thing but the High Court says that's the way it is.
  • No not really....

    Gareth forgive me, but I think you will find that you are only repeating the hopeful, Hackettpool interpretation of the High Courts ruling, rather than the actual legal interpretation. The Court never said Telstra don't own it they said access isn't acquistion.

    iTnews "the High Court unanimously ruled that the telecommunications *access regime* set out in the Trade Practices Act did not amount to an acquisition of *Telstra's property*".

    Clearly the High Court said Telstra's opponents are allowed access, to Telstra's property, which doesn't amount to acquisition.

    You are talking about complete acquisition which is totally different again.
  • Gareth M

    Admittedly I have not read the legislation and nor am I qualified in any way to interpret it (!) so you are quite correct in my repeating the ramblings of others.
    I'm no expert on this either but my understanding is that the implementation of the NBN will rely on the use of the copper pairs which may be left in Telstra's ownership or not. Either way Telstra will be integrating their network into the NBN to get their phone services to their retail customers.
    Your question about the government taking away Telstra property may or may not be relevant depending on the final legislation, but governments can and do compulsorily acquire assets.
  • Agreed Gareth

    Yes governments can compulsorily acquire, but as we have seen with net filtering, if we give than an inch and they'll take a mile.

    It's only Telstra so who cares? But if we let them do it, who or what may or will be next?
  • The End of PPP's and Privatisation

    If Labor goes ahead with the desctruction of a companies assets that they have just sold, you can kiss goodbye to foreign investment in this country. We have a massive need for infrastructure coupled with a Govt that has spent our next 50 years of taxpayers money, and they decide the best apporach is to introduce political risk to all transactions now. Our funds will become more expensive to access, because no one will be able to "hand on heart" really trust the Govt, and no one will know which asset is next in line to be consficated due to some half whit decision. This started with a Tender process that the local beer hall would have called a joke. This decision has now entered a stage where testosterone is driving the outcome. Only problem with that is that after Labour are voted out next election we're all going to suffer the backlash of emotion interfering with capital investment for many many years to come. I fell damn stupid for supporting Labor in the last election and I'm hoping my kids never find out.
  • Would the coalition have been any different?

    Do you think it would have been different under the Coalition?

    They were feuding with Telstra at the time, so Labor were Telstra palsy. Now Labor are feuding with them, the coalition are Tellstra palsy, that's politics. Must do the opposite.

    So we would have had Opel (Optus) for the bush and ? Maybe a smaller broadband network, probably being awarded to anyone but Telstra (as they and the coalition government would still have been feuding), which would still need access to Telstra property.
  • Slightly Different I Suspect

    That's a good point, and even under the Coalition I suspect there would have been change. The main difference in my opinion is that the Coalition understands finances and the long term repercussions of there decsions. So they would make decisions that benefited the country in the long term. Where as Labor seems to be desparate to get something/anything done and to hell with the consequences and the long term impact as long as it is outside of this term. As mentioned, I need to take some blame as I'd shifted my support from the Coalition to Labor in the last election as I'd considered the Coalition to be arrogant. But I can state right now that I never expected this type of decision making to occur, and I wish I had had a crystal ball. Telstra will fight with any Government so its not all Labors fault, however Labor is now making the big decisions to get there own back as opposed to what is right for all of Australia's taxpayers, and we as a country cannot afford to pay for one or two elected individuals personality clashes with a private board. I think we'll hurt for quite some time from a few of these decisions. One last point, by getting cheaper broadband in Rural Australia, I wouldn't be surprised if our taxes go up to pay for it. Remember we're paying for it either monthly to Telstra, or weekly to Labor in tax to pay the money back, but either way, we're paying for it.
  • House of Review. Absolutely.

    The considerations of the Rudd Government to confiscate the assets of an Australian company will prove very interesting.

    Senator Barnaby Joyce has opened a Net service for the Australian public to consider the socialist plans of the Rudd Government.

    The Senators Site is very popular for public comment and I am sure Barnaby and Co will make the Government plans difficult in the Senate.
  • Barnaby

    Heaven help Telstra if the best they can scrape up is the laughing stock of Australian politics, the new Fred Nile , Barnaby Joyce.
  • By their words you shall know them.

    Thats only one fools opinion Anonymous.
  • Not they aren't. Stop telling porkies.

    No-one sponges off Telstra. Telstra has remained filthy rich out of offering wholesale services and their expanding profits is ample evidence.

    All of Telstra's wholesale customers pay adequate fees for the access they receive. Telstra, on the other hand, resorts to various devious tactics to try and prevent this access from being provided and their wishes for higher access pricing amounts to extortion.

    All you pro-Helstra nutters voted for the morons who created this environment of artificial competition so cop it sweet. Labor merged the Trade Practices Commission and the Prices Surveillance Authority to created the ACCC monster that exists today and they deregulated the telecommunications sector.

    You can't have it both ways. The Commonwealth has to create a proper environment for competition to exist or the job will only ever be half-done, like everything that Labor lays their filthy hands on.
  • By their words

  • Again show us the proof

    I see in your typical grubby spineless fashion, you side-stepped this very issue only a few days back Mel/Lord Watchdog (Braaaaadleeeeey).

    Refer Telstra makes a killing and then killing?,2001103929,339295523,00.htm#320126452

    Like Mr, Mrs or Ms Formosa (who is still waiting) I'd also like to see the proof you have. I'm sure we all would.

    Put up or shut up grub.
  • Telstra is NOT an Australian owned company

    "Stop the foreign owned companies sponging off Aussie companies!!"

    Do you know how frustrating it is to read that comment on here constantly, since NWAT is quoted all the time, I'll quote TTT :

    "One of the reasons Telstra said the G9 proposal should not be supported is that some of its proponents are partially foreign owned. Given that Telstra is presently 18.75 per cent foreign owned, and that the senior management of Telstra has continually travelled to Asia, the US and Europe to promote Telstra shares to foreign investors, is this not equally true of Telstra?"

    The foreign ownership of Telstra may not be as high as the Australian ownership of Singtel, but that number is going up, Under present legislation foreign ownership is capped at 35% but that is going to be reviewed.

    Yes Telstra may be a big company built in Australia using Australian dollars, but it is no longer strictly an Aussie icon owned wholly and solely by Australians, and like many Australian companies is slowly being purchased by overseas investors.