Cut up Telstra and cut out its copper, says Optus

Stuart Corner
Tuesday, 09 June 2009 05:23

IT Industry - Strategy

Optus' suggestion is that Telstra be split into a NetCo holding all its access network assets and that the government take a 51 percent stake in this company, which would become the NBN Co responsible for rolling out the NBN. Then as Telstra copper is overlaid with fibre to the home, all the retail services provided over the Telstra copper would cut over to the new fibre and NBN Co would earn revenue providing the underlying connection to those retail service providers.

O'Sullivan claimed that there would be no legal impediment to the government carving up Telstra and creating these two entities. "Parliament has very wide powers to set the rules under which businesses operate. It can do so for many purposes – including the purpose of ensuring that there is sufficient competition in a market.

"So, for example, the Parliament might legislate to set limits on the scale and scope of Telstra's operations – and to require that if Telstra exceeded the limits, it must divest itself of assets. It is easy to see how such a law could be used to impose structural separation on Telstra."

He suggested that such a drastic measure might be unnecessary and that Telstra, convinced of the government's determination to break it up if necessary "could well reach the conclusion that co-operating with Government – and moving Telstra's traffic onto the NBN in a separated model – is the best available outcome for the company."