Samuels silently shouts "structural split" for Telstra

Stan Beer
Sunday, 24 May 2009 10:40

Opinion and Analysis

Australian Competition and Consumer Commission Chairman, Graeme Samuel, seemingly stopped short of calling for the structural separation of Telstra in his speech to the ATUG 2009 Regional Conference in Canberra last week. However, Samuel's thinly veiled address left little doubt that the physical break up of Telstra is what the regulator unequivocally wants.

Commenting on the Australian government’s regulatory reform discussion paper options to improve telecommunications competition in the transition period before the NBN is operational, Samuels provided his own take on proposals to enforce functional separation on Telstra.

"The key feature of functional separation models is that the network provider operates at arms length from the downstream service providers.

"This usually requires operations and management separation and carries the potential for decisions to be made independently by the separated division and the rest of the company.
 
"When successfully implemented, functional separation may go some way to addressing concerns regarding the promotion of equivalence in the treatment of access seekers.

"However, vertical integration of any form into downstream markets,even when subject to functional separation, will not necessarily ensure equivalence."

The last sentence leaves little doubt that the ACCC believes that Telecom New Zealand style functional separation is simply not going to do the trick for a truly competitive telecommunications market in Australia.

CONTINUED Page 2