Telstra must split if it wins FTTN bid: States

update Commonwealth, state and local government representatives have agreed to work on a unified approach to Australia's broadband infrastructure — as pressure mounts on the Federal government to insist on a structural separation of Telstra.

Federal Communications Minister, Senator Stephen Conroy, announced the agreement yesterday at the fifteenth meeting of the Online and Communications Council in Canberra yesterday, saying the development of the framework will mark another shift in Australia's move towards becoming a "knowledge-based" economy.

"For the first time, all three levels of government have agreed to work together to develop a unified vision for broadband in Australia," said Conroy.

Representatives from the Australian Local Government Association and state and territory ministers agreed at the meeting — chaired by Conroy — that the framework should include the development of the national fibre-to-the-node (FTTN) network, the provision of digital content in areas such as health and education, the redevelopment of the country's e-government platform, and directing the capability of the FTTN network to services for indigenous Australians.

The meeting was also used by state government ministers to express their desire to see a structural separation of Telstra should it win the bid for the national FTTN network.

Tasmanian Treasurer Michael Aird said the states and territories wanted to ensure consumers were able to use the network for the cheapest possible prices.

"We can't interfere with the course of action undertaken by the federal government in terms of who they select," Aird told reporters in Canberra.

"But we can say quite clearly that we believe [with] the present structures of some companies there is profiteering going on, by having the integrated model."

Senator Conroy has previously said he is willing to consider regulatory reform which may include further operational separation of Telstra, possibly modelled on arrangements adopted in other countries.

"Our ambition is to get the structure of the national broadband network right," Senator Conroy. "If we don't get the optimal outcome then we do have to revisit issues like the operational separation regime that currently exists."

"We're absolutely drowning in frameworks at the moment right now. What we need is some action and someone to make the hard decisions, namely the structural separation of Telstra," said industry analyst Bruce McCabe of S2 Intelligence.

"I've seen maybe five dozen statements just like this over the last few years from the previous Federal government and now this one. If Stephen Conroy really wants to do something worthwhile, and I think he does, then he needs to make a decision on Telstra that will ensure an enduring investment in Australia's broadband capability," he said.

McCabe told ZDNet.com.au today that the government has been trapped into thinking the national fibre-to-the-node network is a one-off spend, "but they forget that we'll need further upgrades to it in only a few years, it's not something that's standing still".

According to the analyst, the proliferation of high-quality video content likely to emerge over the next few years — particularly in relation to IP television as well as e-government and health initiatives — will "soak up" a significant proportion of the network's bandwidth.

"Right now we're stuck in a position where we either have to bribe or use a big regulatory stick to get Telstra to invest in continuing upgrades to network infrastructure, neither of these options are popular with voters, so structural separation is the only real answer," he said.