Will structural separation ever be enough?

Will structural separation ever be enough?

Summary: The race is on for Telstra to come up with a structural separation plan that will keep the ACCC and service providers happy. But will anything short of a full functional split do the job?


The race is on for Telstra to come up with a structural separation plan that will keep the ACCC and service providers happy. But will anything short of a full functional split do the job?

It's been a complex process. Telstra submitted its structural separation undertaking to the ACCC in July. The regulator wasn't convinced that Telstra had done enough to guarantee equivalence of access, price and service to wholesale customers, and called for comment. They held industry forums (which journalists were excluded from), and now everyone awaits Telstra's second draft of their undertaking.

So far, the roadblocks have been pretty significant. Will it do anything to ease the issue of access to Telstra exchanges? Can we be sure that the retail arm won't have advantageous information about wholesale network plans? Are we sure that processes offered to wholesalers will be as efficient as those used by Telstra's retail arm?

It seems that the undertaking relies a lot on the trust of Telstra doing the right thing. Trust is something that has been sadly lacking in the industry for some time. So this week, I ask the question, can we really expect a level playing field if we don't enforce a functional split on Telstra — separate companies, separate management, separate objectives?

To talk about the process so far, and their respective submissions to the ACCC, you'll hear from:

  • Jonathan Gadir, Senior Policy Adviser at Australian Communications Consumer Action Network (ACCAN)
  • Tony Dooley, partner at Herbert Geer
  • David Ohri, solicitor at Herbert Geer.

None of these people advocate the need for a functional split, but, looking at the sticking points, I can't see an alternative. Can you? Will the structural separation of Telstra achieve its aims? Call the Twisted Wire feedback line on (02) 9304 5198.

Running time: 32 minutes, 09 seconds

Topics: Government, Government AU, Telcos, Telstra


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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  • I am confused by your terminology. Structural seperation implies divestiture of the network components away from the retail components of a business. Functional seperation is merely an stronger version of accounting seperation, which means the company retains ownership and control of both arms.
    • Yeah my logic radar was going berserk also!
      • http://www.ictregulationtoolkit.org/en/PracticeNote.aspx?id=3268

        Structural separation:
        Refers to separating the ownership or control of network elements from the ownership or control of the entity that provides services. This resembles the scenario where an operator outsources ownership of its towers and masts to an independent company. Full structural separation involves outsourcing the entire network to a different company, retaining only the business of providing services to customers.

        Functional separation:
        Is when the operator establishes operationally separate business entities, but there is no actual change in ownership or ultimate control.
        • I have been thinking/reconciling/researching about this nomenclature issue in my breaks over the last day and it appears that the confusion might be along the line of "structural separation" versus "full-structural separation" rather against "functional separation" which should be left somewhere outside this real conversation for people who somehow believe it actually is possible for companies such as Telstra to separate function without separating organisation, management, finance, profit motive, ethics (choke) etc. Which most of us I assume believe is a dream, rather anywhere near a possibility.

          Here is some supporting evidence I am on the right track:

          "In this paper, we treat ownership separation as the defining feature of full structural separation"


          "BT selling Openreach is one route to what I have always advocated, which is a full structural separation of the business"
  • sen7ient

    You are rightly confused simply because people today have lost all sense of logic and go for revolution instead of evolution.

    Our pathetic Federal Government have spent billions to replicate Telstra's wholesale division and will spend billions more, to the tune of $50 billion in borrowings to provide us, with something we already have but faster.

    They appointed a new watchdog who is now on the beat and taking his time to gain fame. Hence the delay in assuming the age old status quo.
    Vasso Massonic
    • god you spout some absolute garbage sometimes vasso.
    • Garbage all the time, not sometimes. Hey Vass, i'm still waiting for you to provide evidence that fibre will be obsolete in 10 years time. Or is that a garbage claim also?
      Salami Chujillo
      • I suppose you can add this to your garbo collection, Pro Tem

        Vasso Massonic
    • "people today have lost all sense of logic" - Your'e obviously making undertones about yourself. You are a great example of Bugbear!
    • You get use to VassMass and his other greedy mate, who truly believe Australia's telecommunications MUST reimburse them for their own stupidity in "investing (LOL)" in Telstra shares...
    • By the way evolution is a VERY SLOW process!
  • Wow, way to completely hijack my point. When did this become about the NBN?
    Besides, your post is completely erroneous.
    It will not cost $50billion. It will not cost taxpayers a cent (in the long haul), as you imply.
    We do not have this already, we do not have ubiquitous broadband access that has been designed around true broadband and will allow far greater access for a range of applications that have nothing to do with the internet.
    • NBN plays the big part in Teltra's separation of sorts. If the NBN were to proceed as guesstimated and time span, $50 will be chicken feed .
      Vasso Massonic
      • Well... $50 is chicken feed, unless of course one is buying TLS shares, then you'd be able to buy sh!tloads... rofl.
  • I missed adding that the stated borrowings will be $36 billion, not $50 billion.
  • What is a Bugbear? - In a modern context, the term bugbear serves as a metaphor for something which is annoying or irritating. Source:http://en.wikipedia.org/wiki/Bugbear
  • Beta you are a bore and an unintelligent person who refuses to understand that others may have a different point of view. Australia needs less people like you for you identify yourself as the ugly ocker.
    • Gee and YOU AND YOUR SHARES AREN'T... lala?

      At least I am motivated by what I believe is best for Australia and Australians... not my own greedy despicable, more precious than life itself, TLS shares...!

      FYI - I'd rather be an ugly but sincere ocker than a greedy and stupid ocker...!
  • Phil why do you say that the ACCC must keep opponents of Telstra "happy"?
    Perhaps it is possible that the ACCC can be happy while the Telstra opponents remain unhappy. It is a fact that Telstra opponents will only be "happy" when they have, by parasitical actions, caused the destruction of fair competition with rules and regulation that are unfair to Telstra.
  • By the way the level playing field will be created with the delivery of the NBN. The Telstra Wholesale will be history and Senator Conroy will have delivered his vision of conditions where all are equal and at liberty to compete fiercely and with vigour to the benefit of the Australian consumer. So please forget the whinge and baby tears Telstra opponents stand on your own feet and compete. Shape up or ship out.