Optus still wants Telstra split up

The nation's number two telco Optus said today it still wanted Telstra's wholesale and retail arms separated from each other, and hadn't noticed any change in the company's stance towards its rivals in recent times.

The nation's number two telco Optus said today it still wanted Telstra's wholesale and retail arms separated from each other, and hadn't noticed any change in the company's stance towards its rivals in recent times.

The comments came as Optus general manager of regulatory affairs Andrew Sheridan briefed ZDNet.com.au on his company's response to the Federal Government's review into industry regulatory changes, which could accompany the $43 billion National Broadband Network project.

Sheridan noted that Telstra's approach had not changed in recent times, despite its appointing what many have seen as a more conciliatory chief executive, David Thodey and chairman, Catherine Livingstone. The Optus executive particularly noted Telstra's move last week to appeal an Australian Competition and Consumer Commission (ACCC) ruling on unbundled local loop pricing.

Optus' preferred view of Telstra's future (at this stage) would see the telco split into two separate companies, one to own and operate Telstra's network and sell wholesale services to other telcos, and one to sell retail services. Shareholders would exchange their Telstra shares for equivalent shares in each company.

Another option would see Telstra simply setting up a separate unit within its own operations to deal with the network and wholesale side of its business. Sheridan noted the government was already planning to implement a wholesale-only model for its planned National Broadband Network company, and claimed that implementing a similar model across the industry prior to the NBN's establishment would benefit the industry.

The other planks of Optus' regulatory submission will focus on forcing Telstra to provide access to services to rivals on "truly equal" terms as it does its own retail businesses, new pricing rules for wholesale services and stronger powers for the ACCC.

In general, Sheridan said Optus' submission was designed to obviate what he described as the "market failure" of the current regulatory regime, due to what he claimed was an overly dominant position by Telstra by virtue of its vertically integrated structure.

The problem mainly applied to the fixed-line sphere, Sheridan said, with the mobile sphere having found more success with fuller infrastructure-based competition since the telecommunications industry was de-regulated in 1997. "If the policy-makers were still around 12 years on, I doubt they would say their policies were successful," he said.