Senate votes to split Telstra, NBN is here

Stan Beer
Friday, 26 November 2010 13:26

IT Policy - Government Tech Policy

In an historic vote, the Senate today effectively voted to structurally separate Australia's largest telco Telstra, paving the way for the rollout of the National Broadband Network. The decision moves the Government closer to buying Telstra's network and customers for $13.8 billion and rolling it into NBN Co, provided Telstra's shareholders approve the sale.

The final vote was a tight one, being passed 30 to 28, with the Government requiring the support of the Greens and two independents Senators Nick Xenophon and the ultra-conservative Stephen Fielding. The only obstacle to the NBN left standing are Telstra shareholders.

The structural separation of Telstra and the sale of its network will need to be put to shareholders at a general meeting. The Government has previously warned that if Telstra doesn't structurally separate it will be forced to functionally separate and be denied access to vital wireless spectrum and forced to sell its stake in Foxtel.

The Government has released scant detail of its NBN financials other than to say it will cost $35.7 billion over 10 years plus the $13.8 billion to buy Telstra's assets, with the Government contributing $27 billion.

It has generally been viewed as a major coup for the Government to win approval of both the Greens and especially the two Senate independents without being forced to publicly disclose its full NBN business plan or subject its project to an independent cost benefit analysis as demanded by the Coalition.

Communications Minister Steven Conroy has described the Senate vote as an historic reform. The Federal Opposition, however, has yet to issue a response.

With the conclusion of government business concerning the establishment of the NBN in 2010 and Parliament breaking for summer recess, all eyes will now turn to Telstra. The former government-owned monopoly, which was partially privatised in the T1 float of 1997, followed by the T2 and T3 stages in 1999 and 2006, will now ask its shareholders to voluntarily exchange its most valuable assets for cash.

In turn, NBN Co will become the government-owned telecoms monopoly of yesteryear, except that it will only provide wholesale broadband services. There have been concerns raised as to whether NBN Co will sell directly to Government agencies, cutting private retailers out of the action.

Also in contention is whether future governments will follow through on the promise to privatise NBN Co, something to which the increasingly influential Greens party is strongly opposed.