re: AUSTRALIA - Telstra told to structural seperate or else !
- this was due I guess it's time to play hardball with unrelenting incumbents and good to see that Australia is on the leading edge here after lagging telecom compeition for more than 10 years -
theaustralian.news.com.au
Stephen Conroy rings in a new era for telcosFont Size: Decrease Increase Print Page: Print Nicola Berkovic and Mitchell Bingemann | September 16, 2009
Article from: The Australian
THE Rudd government has given Telstra an ultimatum to split its wholesale and retail businesses or it will be forced to sell key assets and locked out of new broadband and mobile phone opportunities, in the biggest shake-up of the communications sector in a generation.
Communications Minister Stephen Conroy made the dramatic announcement yesterday, declaring the government wanted to inject competition into the market for telephone and broadband services as it prepares to roll out its $43 billion national broadband network.
Arguing that previous Labor and Liberal governments had failed to undertake serious reforms of the sector, Senator Conroy said: "The measures in this legislation will finally correct the mistakes of the past. The government will require the functional separation of Telstra, unless it decides to voluntarily structurally separate."
The move to break Telstra's stranglehold on the sector, which caused the company's share price to plunge 14c, or more than 4 per cent, was seen as increasing pressure on the telco giant to fold its existing copper, cable and fibre networks into the NBN.
The assets are seen as crucial to cutting infrastructure costs and speeding up delivery of the NBN, which faces stiff competition from Telstra.
When pressed last night about whether the government was planning to take over Telstra's network and upgrade it rather than build its own, Senator Conroy said a single network was "one of the options" on the negotiating table.
"We welcome Telstra, Optus, any of the other potential vendors to be part of our network," he told ABC's Lateline.
"If that turns out to be a partnership with Telstra ... as we lay the fibre into homes, we'd be taking the copper out and we, the NBN Co, would become the sole connection from the curb to the home."
If Telstra refuses to split voluntarily, the government will use the new laws to impose functional separation on the company.
The government could also deny Telstra access to new spectrum for advanced wireless broadband unless the telco sells off its cable network and 50 per cent stake in Foxtel (25 per cent owned by News Corporation, owner of The Australian).
Telstra chief executive David Thodey said the government's announcement yesterday was "disappointing".
"It is Telstra's view that many aspects of this package are unnecessary and need never be implemented if a mutually acceptable outcome can be reached on the national broadband network," Mr Thodey said.
Telstra last month told analysts functional separation could cost $500 million to $1 billion and take one to five years to implement.
Constitutional expert George Williams said it would be difficult for Telstra to challenge the laws. There was no legal impediment to the government denying Telstra access to new spectrum.
"It's a clever way of forcing an outcome without triggering the constitutional requirement to pay compensation," Professor Williams said.
It is understood Telstra received a detailed briefing yesterday morning on the changes, which Senator Conroy hopes to see in place before the end of the year.
The opposition accused the government of holding a gun to Telstra's head and demanded a cost-benefit analysis.
Kevin Rudd defended the move, saying the government had embarked on building the NBN because the nation ranked in the bottom half of the OECD for broadband take-up and consumers faced expensive services.
"The government is acting because the previous government engaged in an absolute neglect of this country's critical infrastructure for the future," the Prime Minister said.
Senator Conroy said it was possible to achieve a "win-win outcome" for shareholders and all Australians, but Telstra will not receive compensation because the company is not being forced to sell its assets.
The new laws, to be scrutinised by a parliamentary inquiry, will strengthen consumer safeguards, including tighter regulation of the removal of pay phones and tough new penalties for telephone companies that fail to meet minimum service obligations.
The ACCC will also gain new powers to address breaches of competition law and set the price for access to Telstra's fixed-line services.
While the changes received the backing of the Greens and independent senator Nick Xenophon, the government could face a challenge getting the changes through the Senate, as opposition communications spokesman Nick Minchin labelled the proposal "radical and risky".
Family First senator Steve Fielding questioned whether the Future Fund, which sold a third of its Telstra stake three weeks ago for almost $2.4bn, had advance notice of the announcement while its remaining 1.4 million shareholders had not had any warning.
But the allegation was immediately dismissed by Finance Minister Lindsay Tanner, who said the Future Fund had always planned to sell down its holding in Telstra.
Financial analysts said Telstra's market performance was unlikely to recover while its response to the reforms was shrouded in uncertainty.
White Funds Management investment manager Angus Gluskie said: "I don't think we'll see for many years, if at all, the $9 value Telstra's shares hit during 1999."
The move has sparked concerns among senior members of the investment community that the government's decision to change the regulatory ground rules after enticing institutions and mum and dad investors to purchase Telstra shares, could undermine future government asset sales.
However, Optus and other major telecoms companies welcomed the changes as long overdue. |
