Telcos dare Telstra to axe NBN deal

Having Telstra walk away from the National Broadband Network (NBN) would be preferable to the government giving its approval to a deficient structural separation undertaking from the telco, according to the Competitive Carriers Coalition (CCC).

Having Telstra walk away from the National Broadband Network (NBN) would be preferable to the government giving its approval to a deficient structural separation undertaking from the telco, according to the Competitive Carriers Coalition (CCC).

Telstra CEO David Thodey reportedly said this month that if the Australian Competition and Consumer Commission (ACCC) didn't approve its recently submitted structural separation undertaking, the telco could walk away from its $11 billion deal with the National Broadband Network Company (NBN Co), which sees it provide access to ducts and decommission its copper, moving its customers onto the government-owned network.

The ACCC said after Telstra provided it with the undertaking that it may require the telco to rework it, because it didn't think that the document provided enough assurance that Telstra would provide open access to its retail competitors.

Telstra has also been criticised by its competitors for the separation undertaking ; they have said that it provides inadequate protection for competition.

"The undertaking Telstra presented last month is so deficient that the ACCC has already told Telstra it is unacceptable," the CCC, which represents a number of Telstra's competitors, said yesterday in a statement.

The CCC said that the affects of a half-baked undertaking would be so pronounced that it overshadowed Telstra's knife against the government's neck — the deal between Telstra and NBN Co, without which the NBN is expected to cost a lot more to build.

"The danger of a deficient Telstra undertaking is that [until the NBN is built] Telstra will be able to take advantage of its dominant position in both wholesale and retail markets, to the ultimate detriment of consumers."

The CCC pointed out that legislation had forced Telstra to choose between voluntary structural separation and a forced functional separation like BT underwent in the UK. If Telstra pulled out of the deal, not only would it have to take the second path, because it hadn't managed the voluntary separation, but it would also face competition from the NBN and would be constrained by cherry picking laws from overbuilding key parts of NBN infrastructure.

"The CCC is of the view that this scenario would be a preferable outcome to a deficient Telstra undertaking," the CCC said, adding that it would, this week, present expert analysis to the ACCC that this would be the case.