Telstra offers an olive branch to the ACCC on structural separation

Stuart Corner
Monday, 31 October 2011 15:51

IT Policy - Regulation

Telstra is seeking to allay the ACCC's concerns and the widespread industry opposition to its structural separation undertaking with plans to hold an industry forum, ahead of which it has released an issues paper.

Telstra submitted the undertaking on 29 July  and the draft migration plan on 24 August. The separation undertaking details how Telstra plans to cease supplying fixed-line voice and broadband services over its copper and HFC networks and to use the NBN instead. It provoked strident opposition from other telcos and the ACCC expressed significant concerns.

Telstra has flagged the possibility of revising the SSU as a result of feedback from the forum, but has given no commitments. Lodging the issues paper  with the ASX, Telstra said: "The possible approaches discussed in this paper are subject to further consideration and do not reflect any settled position or proposal by Telstra in relation to whether, or how, the SSU may be revised."

However, Telstra said it would "continue to work closely with the ACCC on the SSU and Draft Migration Plan" and that it aimed to lodge a revised SSU with the ACCC as soon as possible. It added: "Telstra continues to believe that none of the issues raised by the ACCC in relation to the SSU is insurmountable and that they can be resolved in a way consistent with our principle of protecting shareholder value."

The Competitive Carriers Coalition made a lengthy submission to the ACCC on the undertaking, saying it was "deeply concerned with the many exemptions and exclusions that apply to almost every aspect of the obligations Telstra has proposed for itself in the [undertaking]."

Acceptance of these documents by the ACCC is an essential prerequisite to the Definitive Agreement between Telstra, the Government and NBN Co detailing Telstra's participation in the NBN being finalised. Telstra secured overwhelming shareholder approval for the agreement at its AGM on 18 October, but has promised shareholders that, if its negotiations with the ACCC result in any significant change to that agreement, shareholders will have an opportunity to consider and vote on it.

The ACCC initiated a mandatory 28 day public consultation period on the undertaking and migration plan on 30 August,  with chairman Rod Sims saying; "The [ACCC's] preliminary view is that the structural separation undertaking that has been provided does not address legislative requirements'¦The ACCC's main area of concern'¦relates to the adequacy of Telstra's proposed interim equivalence and transparency measures [and] there needs to be a clear and enforceable commitment to an 'equivalence of outcomes' that enables wholesale customers and Telstra's retail businesses to gain access to key input services of equivalent quality and functionality."