Time running out for Telstra's structural separation.

Stuart Corner
Friday, 16 December 2011 08:41

IT Policy - Regulation

Communications minister senator Stephen Conroy has extended until 31 March 2012, the deadline by which Telstra must complete its structural separation. This takes the total extensions to 12 months, after a further six months legislation requiring Telstra to have instead completed functional separation will come into force.

In a bid to end Telstra's dominance of the industry through its control of the main access network, the PSTN, the Government wants Telstra to voluntarily separate structural, but if it fails to achieve this within a specified timeframe, functional separation will be imposed.

To achieve this, in November 2010, the Government passed the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Act 2010 requiring functional separation in the absence of acceptable structural separation.

As passed the legislation required Telstra to submit a draft functional separation undertaking to the minister. After public consultation and, if necessary, amendment this would become binding on Telstra by being made a condition of its licence. The initial deadline for this was 31 March 2011.

On 25 March 2011 this deadline was extended to 30 June 2011, and on 24 June extended again to 31 December 2011. In the latest extension, issued on 13 December, the deadline has been extended to 31 March 2012. Under the legislation the total of all extensions must not exceed 18 months: which means only a further six months of extensions are possible.

According to an explanatory memorandum issued in conjunction with the extension, the legislation gave the minister freedom to make these extensions to "allow Telstra to concentrate on preparing its structural separation undertaking (SSU) rather than having to prepare at the same time both an SSU and a functional separation undertaking."

Given that Telstra must prepare a draft functional separation undertaking which the minister will issue for public consultation before finalising and issuing his function separation determination, any further significant delays in Telstra getting its structural separation undertaking and its migration plan approved by the ACCC could see it next year having to start work on the mammoth task for preparing for functional separation to enable mandated functional separation to take place on 30 September 2012.