Cornered!
Cornered! is a blog devoted, most of the time anyway, to telecommunications: local and global issues, technology, people and trends from the perspective of someone who's been reporting, analysing and commenting on the industry since the dark ages (BC - before competition). Sometimes serious, sometimes flippant, sometimes frivolous. Controversial, analytical, informative, amusing, but never boring; a vehicle for examinations of important issues and observations on my encounters and experiences in an industry where polarised views and hyperbole are the norm.

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Technology news and Jobs arrow Cornered! arrow Smoke and mirrors on structural separation
Smoke and mirrors on structural separation E-mail
by Stuart Corner   
Tuesday, 27 May 2008
Optus has released a report, commissioned from the Competition Economists Group (CEG-Asia Pacific) to push its claim that Telstra should be structurally separated, but it is a document of little substance.

CEG was asked to provide "a high-level report on the economic costs and benefits of structural separation in the specific context of the deployment of a national broadband network (NBN)." In particular, "to consider the economic consequences of a model of separation in which the owner of the NBN, including the local loops, digital subscriber line (DSL) and backhaul equipment is separated from other network and retail activities."

It lists as its "key findings":

- Without structural separation, Telstra will have very powerful incentives to damage competition in downstream markets that rely on access services provided by the NBN. In fact, regulation of access prices without structural separation may increase the incentives to damage competition in downstream markets;

- These incentives are unchanged by accounting or operational separation regimes;

- Operational separation is likely to reduce the benefits of vertical integration without significantly deterring anti-competitive conduct. Effective operational separation is likely to mean that regulation will creep from the monopoly part of the network to potentially competitive areas;

- International surveys suggest that operational separation has not worked as some had hoped. There are international precedents for structural separation in the telecommunications industry in the context of an NBN. CONTINUED



 
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