Break up Telstra and force it out of Foxtel, says Optus

Stuart Corner
Wednesday, 03 June 2009 17:18

IT Industry - Strategy

Optus has released its submission to the government's review of telecommunications regulation, calling for Telstra to be broken up into separate network-owning and retail service providing entities and for it to be forced to divest its 50 percent stake in Foxtel.

The submission was one of over 90 received by the Government when the deadline for submissions passed at 5pm on 3 June, but is the only one to have been made available by the submitter. The Government says others will be posted on its website, unless submitters have instructed otherwise, once they have been checked for defamatory content.

Certainly Optus was pulling no punches when it announced its submission. Maha Krishnapillai, Optus' director of government and corporate affairs said: "[Telstra] routinely discriminates against [wholesale] customers." - discrimination whch is prohibited by regulations.

He continued: "Telstra is able to do this because of an ineffective regulatory regime, a regime which Telstra has manipulated and abused in its quest to undermine competition and continue its stranglehold on the Australian consumer."

In summary, Optus says: "Telstra should be required to establish a separate Access Service Company (ASC) – that is structurally and functionally separated from its Retail Businesses. It should be owned and operated as an independent entity from the current Telstra Retail businesses with its own board and management team. This company should hold the current fixed line network assets and provide services to all access seekers (including Telstra Retail). Such an entity could be created by giving existing Telstra shareholders two shares for each share they hold today; one to be held in the ASC; and one to be held in the Retail entity."

In addition, Optus is calling for a wide ranging review of the regulatory regime administered by the ACCC to remedy the shortcomings of the current regime that it says "have resulted in a dysfunctional market structure and a regulatory system that is mired in litigation."


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